The Sharing Economy: Embracing Change with Caution

I Sharing Economy - Embracing change with caution uppmärksammas att digita-
liseringen utgör den möjliggörande teknologiska kraften för delningsekonomin.
Innovation på området innebär att identifiera outnyttjade varor och tjänster, maxi-
mera resursutnyttjandet samt att föra samman utbud och efterfrågan. Författarna
noterar att Sverige, i förhållande till andra ekonomier, ligger steget före vad gäller
specialisering i kunskapsekonomin men att mer skulle kunna göras för att under-
lätta fortsatt tillväxt inom detta område. Bland policyrekommendationerna nämns
bl a behovet att främja flexibilitet både på arbetsmarknaden och inom utbild-
ningsystemet och att underlätta för företagande och innovation.
Rapporten är författad av Claire Ingram och Robin Teigland, doktorand respektive
docent vid Handelshögskolan i Stockholm samt Anna Felländer, chefsekonom
Swedbank.
W W W . E N T R E P R E N O R S K A P S F O R U M . S E
N Ä R I N G S P O L I T I S K T F O R U M R A P P O R T # 1 1
NÄRINGSPOLITISKTFORUMRAPPORT#11
SHARING ECONOMY
EMBRACING CHANGE WITH CAUTION
”A cornerstone for a successful democracy is equality before the law (Justitia is blind). If
rules apply differently to different people the system will start to crumble. A fundamental
challenge is to find ways to integrate the sharing economy into the formal economy or to
radically change taxation so that sharing is equated with trade and commerce and labor
with financial returns.
Erika Åslund
Lawyer and partner Cederqvist
”A significant piece of work - thoughtful and insightful - that raises crucial questions for
governments, corporations and society at large.
Noreena Hertz
CEO & Co-Founder Generation K and Professor, University College London
”Sharing economy- embracing schange with caution is a comprehensive overview of
where Sweden currently stand in an international comparison and it also the first at-
tempt to draw policy implications in an area that constantly changes. In my view inno-
vation, entrepreneurs and private equity is what will make the sharing economy grow.
Sweden has the potential but must nurture the opportunity.
Elisabeth Thand Ringqvist
Chairman Swedish Private Equity & Venture Capital Association
”Taking up slack is tremendously important to making cities smarter and more people-
friendly. Most major metros have far too many parking spaces, for instance. Get parked
cars off the streets, guide drivers to available parking faster and share spaces that aren’t
being used at various times. Reel in this slack and you’ll free up lots of space for other
kinds of human activity!
Billy McCormac
President of the Stockholm Property Association
ANNA FELLÄNDER
CLAIRE INGRAM
ROBIN TEIGLAND

THE SHARING ECONOMY
EMBRACING CHANGE WITH CAUTION
Anna Felländer
Claire Ingram
Robin Teigland

© Entreprenörskapsforum, 2015
ISBN: 978-91-89301-75-7
Författare: Anna Felländer, Claire Ingram och Robin Teigland
Grafisk produktion: Klas Håkansson, Entreprenörskapsforum
Omslagsfoto: IStockphoto
Tryck: Örebro universitet
ENTREPRENÖRSKAPSFORUM
Entreprenörskapsforum är en oberoende stiftelse och den ledande nätverksor-
ganisationen för att initiera och kommunicera policyrelevant forskning om entre-
prenörskap, innovationer och småföretag. Stiftelsens verksamhet finansieras med
såväl offentliga medel som av privata forskningsstiftelser, näringslivs- och andra
intresseorganisationer, företag och enskilda filantroper. Författarna svarar själva för
problemformulering, val av analysmodell och slutsatser i rapporten.
För mer information se www.entreprenorskapsforum.se
NÄRINGSPOLITISKT FORUMS STYRGRUPP
Per Adolfsson, Bisnode (ordförande)
Enrico Deiaco, Tillväxtanalys
Anna Felländer, Swedbank
Stefan Fölster, Reforminstitutet
Peter Holmstedt, RISE
Hans Peter Larsson, PwC
Jonas Milton, Almega
Annika Rickne, KTH
Elisabeth Thand Ringqvist, SVCA
TIDIGARE UTGIVNA RAPPORTER FRÅN NÄRINGSPOLITISKT FORUM
#1 Vad är entreprenöriella universitet och ”best practice”? – Lars Bengtsson
#2 The current state of the venture capital industry – Anna Söderblom
#3 Hur skapas förutsättningar för tillväxt i näringslivet? – Gustav Martinsson
#4 Innovationskraft, regioner och kluster – Örjan Sölvell och Göran Lindqvist, medverkan av
Mats Williams
#5 Cloud Computing - Challenges and Opportunities for Swedish Entrpreneurs – Åke Edlund
#6 3D printing – Economic and Public Policy Implications – Maureen Kilkenny
#7 Patentboxar som indirekt FoU-stöd – Roger Svensson
#8 Byggmarknadens regleringar – Åke E. Anderssson och David Emanuel Andersson
#9 Sources of capital for innovative startup firms – Anna Söderblom och Mikael Samuelsson
#10 Innovation utan entreprenörskap? – Johan P Larsson

FÖRORD
Näringspolitiskt forum är Entreprenörskapsforums mötesplats med fokus på förut-
sättningar för det svenska näringslivets utveckling och för svensk ekonomis långsiktigt
uthålliga tillväxt. Ambitionen är att föra fram policyrelevant forskning till beslutsfat-
tare inom såväl politiken som inom privat och offentlig sektor. De rapporter som
presenteras och de rekommendationer som förs fram inom ramen för Näringspolitiskt
forum ska vara förankrade i vetenskaplig forskning. Förhoppningen är att rapporterna
också ska initiera och bidra till en allmän diskussion och debatt kring de frågor som
analyseras.
Delningsekonomi eller Sharing Economy och collaborative economy är samlings-
namn på aktiviteter som minskar resursåtgången genom att effektivare utnyttja
varor och tjänster genom delning. Allt fler hakar på trenden att gå från att själva äga
eller kunna allt till att hyra ut och låna både saker och kompetens. T ex låter Airbnb
privatpersoner hyra bostäder av varandra vilket har gjort succé över hela världen.
I The Sharing Economy - Embracing change with caution uppmärksammas att digi-
taliseringen utgör den möjliggörande teknologiska kraften för delningsekonomin.
Innovation på området innebär att identifiera outnyttjade varor och tjänster, maxi-
mera resursutnyttjandet samt att föra samman utbud och efterfrågan. Författarna
noterar att Sverige, i förhållande till andra ekonomier, ligger steget före vad gäller
specialisering i kunskapsekonomin men att mer skulle kunna göras för att underlätta
fortsatt tillväxt inom detta område. Bland policyrekommendationerna nämns bl a
behovet att främja flexibilitet både på arbetsmarknaden och inom utbildningsyste-
met och att underlätta för företagande och innovation.
Rapporten är författad av Claire Ingram och Robin Teigland, doktorand respek-
tive docent vid Handelshögskolan i Stockholm, samt Anna Felländer, chefsekonom
Swedbank. Den analys samt de slutsatser och förslag som presenteras i rapporten
delas inte nödvändigtvis av Entreprenörskapsforum, författarna svarar själva för
dessa. Ekonomiskt stöd har bl a erhållits från Tillväxtverket.
Stockholm i juni 2015
Johan Eklund
Vd och professor Entreprenörskapsforum

FÖRORD 3
EXECUTIVE SUMMARY 7
Acknowledgements 9
1. INTRODUCTION 11
2. WHAT IS THE SHARING ECONOMY? 13
What are the Drivers of the Sharing Economy? 13
What Does the Sharing Economy Mean in Economic Terms? 18
Our Definition of the Sharing Economy 19
3. THE GLOBAL SHARING ECONOMY 21
Tangible Assets 21
Sharing Cars 21
Sharing Rooms and Land 23
Intangible Assets 24
Sharing Money 24
Sharing Time 26
Information and Influence 27
4. THE SHARING ECONOMY IN SWEDEN 29
Tangible Assets 30
Sharing Cars 30
Sharing Rooms and Land 32
Sharing Small Consumables 34
Clothing 34
Tools 35
Used Goods 35
Bikes 36
Intangible Assets 36
Sharing Money 36
Sharing Time 36
TABLE OF CONTENTS

5. REGULATORY CONSIDERATIONS 39
Employment Regulation 39
Regulation of Production and Commerce 40
6. MIXED ECONOMIC IMPLICATIONS 43
New Pricing Mechanisms Push Inflation Downward 43
Lower Demand for Capital in the “Zero Marginal Cost Society”? 45
Competition 47
Labor Productivity and a Labor Market under Transition 47
Leading to Increased Inequality? 49
7. SWEDEN AHEAD, BUT CHALLENGES REMAIN 51
Some Possibilities: Scenarios for 2020 52
Scenario: Business as Usual 54
Scenario: Shadow Economy 54
Scenario: Freelance Economy 55
Scenario: Internet of Space 56
8. POLICY CONSIDERATIONS 59
Flexible Regulation Using “Trial and Error” 59
Facilitation of Entrepreneurship 60
The Government’s Involvement in the Sharing Economy 61
Labor Market Flexibility, Education and
Challenges for General Statistics 62
Housing and the Gains from Dynamic Clusters 63
9. CONCLUSION 65
APPENDIX ONE: FURTHER READING 66
APPENDIX TWO: EFFECTS ON THE FINANCE INDUSTRY 66
Policy Implications for Sweden’s Central Bank (Riksbanken) 67

6 THE SHARING ECONOMY – EMBRACING CHANGE WITH CAUTION

ENTREPRENÖRSKAPSFORUM 7
EXECUTIVE SUMMARY
The Sharing Economy has been the subject of considerable interest among policy
makers across the globe. This report begins by developing a pragmatic definition of
the Sharing Economy. Next, the report describes global Sharing Economy trends, fol-
lowed by an examination of the Sharing Economy in Sweden. Subsequent sections
address regulatory considerations and potential economic implications. The report
concludes with a discussion of possible policy responses.
Defining the Sharing Economy. Driven by digitalization, the Sharing Economy involves
the peer-to-peer exchange of tangible and intangible slack (or potential slack) resour-
ces, including information, in both global and local contexts. This mediated exchange
tends to reduce transaction costs for users by replacing third-party intermediaries
with digital platforms. However, the elimination of third-party intermediaries means
that risks are often borne by the providers and consumers of resources rather than by
a central actor.
The Global Sharing Economy. Trends in tangible assets include the rise of household
names such as Airbnb and Uber. These house- and car-sharing services have provided
income for many unemployed and under-employed individuals by allowing them to
utilize resources that were previously idle. However, there has been push-back from
users and regulators in various countries, due primarily to concerns about safety, unfair
competition and the poor treatment of workers. Trends in intangible assets largely
relate to the sharing of money through the several types of so-called crowdfunding
platforms: donation- or reward-based crowdfunding, equity-based crowdfunding and
debt-based crowdfunding, also known as Peer-to-peer (P2P) lending. Although these
platforms have become an important source of philanthropic and entrepreneurial
finance, they are subject to incompatible regulations in different parts of the world.
Sharing time and information have been received less controversially but are nonethe-
less important drivers of the Sharing Economy because they help users screen other
users based on reviews and other information.

CHAPTER 1 EXECUTIVE SUMMARY
TheSharingEconomyinSweden.ComparedtootherareasofEuropeandtoelsewhere
in the world, Sweden’s Sharing Economy is less developed in certain areas but more
developed in others. Notably, in Sweden, public actors have been more involved in the
Sharing Economy, encouraging the use of sharing ideas for public spaces.
Trends in tangible assets shared in Sweden have been dominated by global players
such as Airbnb and Uber; however, local actors have reacted by developing digital
platforms of their own. For example, a large number of firms have aided in the sharing
of second-hand clothing, tools and used goods, and numerous cities have introduced
bike-sharing arrangements.
Intangible assets, such as money, are also being shared through Swedish and
international crowdfunding platforms, and the Swedish platform, FundedByMe, has
become a major European player in this field.
Regulatory Considerations. Employment regulations present complicated issues for
the Sharing Economy. On the one hand, many platforms argue that they are mere
matchmakers, connecting buyers with sellers, and these platforms do not provide
users with any form of employment security. On the other hand, some platforms
set the terms of the agreement; for example, Uber establishes its drivers’ rates, and
TaskRabbit requires that freelancers on its site reply to a request within several hours
of receiving it. The line between employee and self-employed contractor is therefore
blurred.
Regulations regarding production and commerce may also need to be approached
creatively to protect parties to Sharing Economy contracts and the public interest. In
addition, questions regarding value-added taxes (VAT) should be clarified by govern-
ment actors. Other key concerns that are considered inadequately addressed by cur-
rent platforms include safety, privacy, intellectual property and ownership. Moreover,
risk, which is typically borne by a firm, is transferred to the users on one or both sides
of a platform.
The Sharing Economy will have mixed economic implications. New pricing mecha-
nisms will push inflation downward as transaction and marginal costs are redu-
ced. Additionally, transparency, an increased matching of supply and demand, and
the cutting out of middlemen through digital platforms will further drive prices down
– and with them, inflation.
Lower demand for capital is another possible outcome in the Sharing Economy as
both idle and existing recourses will be used more efficiently.
Competition is likely to increase both between Sharing Economy firms and traditio-
nal firms and among Sharing firms, in turn driving down prices. However, the network
effects of many services being on a single platform may also decrease competition as
this drives out competitors.
Labor market transition is a likely consequence of the Sharing Economy; one which
we are already seeing today. While it creates efficiencies and improves productivity for
some, it will likely decrease productivity for others. Studies predict that 36-60 percent of

the jobs in Sweden will be lost due to digitalization and robotization, but it is also likely
that, as in the past, new jobs in new fields will be created. An important amount of new
jobs will be created in the Sharing Economy. Nevertheless, disparities in productivity
are likely to exacerbate income inequality among workers.
Sweden is ahead, but challenges remain as Sweden has both relatively high levels of
employment specialized in IT and communications and a number of well-developed
entrepreneurial clusters. However, specialized industries in Sweden that employ a large
number of people, such as Transportation, Construction and Metal Manufacturing,
are likely to be hit hard by increases in digitalization and automation as well as by the
Sharing Economy cutting out traditional middlemen.
Scenarios for 2020 include numerous possibilities that depend on the pace of
technological adoption and development and on the rate of global economic growth.
High technological growth could lead either to a freelance economy or to a so-called
“Internet of Space,” depending on whether the corresponding economic growth is low
or high. In the same vein, low technological growth may lead either to the creation of
a shadow economy (where there is low economic growth) or to “business as usual”
(where there is high economic growth).
Policy Considerations. Relative to other economies, Sweden is ahead of the curve
in knowledge economy specialization. We recommend a path that balances growth
of the Sharing Economy with labor interests. To this end, we recommend discussions
regarding 1) the development of flexible regulatory schemes, 2) the facilitation of
entrepreneurship and innovation, 3) engaging government involvement, 4) promoting
labor market flexibility and education, and 5) the elimination of bottlenecks in the
housing market.
Conclusion. The Sharing Economy presents a number of interesting possibilities for
the future of work, production, and collaboration in Sweden. Although Sweden is in
an excellent position to benefit from the growth of the Sharing Economy, the country
could do more to facilitate further growth in this area.
Acknowledgements.
We would like to thank Michel Elmoznino Laufer, Åsa Minoz, Sara Modig, Arun
Sundarajan, and Karl Wennberg for their helpful comments and insights. We would
also like to thank Entreprenörskapsforum for their interest in this topic and all of the
members of the forum for their enthusiasm and insights.

Chapter 1
INTRODUCTION
When one thinks of the Sharing Economy, one typically thinks of the global “ride-
sharing” application, Uber, or the house-sharing platform, Airbnb. These companies
are just some of the global firms that have been built on the premise that a consumer’s
underused or spare fixed assets can be shared—a business model that is currently
worth USD 26 billion globally1
and is predicted to grow to USD 335 billion by 20252
.
Other business models, such as that of the task-sharing site TaskRunner, allow individu-
als to “share” their skills and office hours. Still other models allow individuals to share
their spare cash; rather than holding it in a zero-interest bank account, they can lend it
to other individuals (e.g., Sweden’s Trustbuddy) or firms (e.g., ToBorrow, FundedByMe)
in what has variously been called crowdfunding or peer-to-peer lending. Although
many of these services are provided by startup firms that have received phenomenal
market valuations (such as Uber, with a USD 41 billion valuation), incumbent firms
(including Avis, DHL, Banco Santander, and Marriott Hotels) have also developed their
own Sharing Economy services.
Together with the Internet and mobile phones, the evolution of the Sharing Economy
has led to increased digitalization; the more efficient sharing of goods, services and
information; and faster and more effective internationalization among new firms due
to reduced transaction costs. Indeed, many argue that the Sharing Economy is a “social
revolution” because it is leading to the transfer of power from a few large firms to a
multitude of loosely connected actors. Although statistics are unavailable for Sweden,
it is estimated that the Sharing Economy is growing beyond a mere niche economy. For
example, in the UK, approximately 25 percent of the population has participated in this
1. Botsman, R., & Rogers, R. (2011). What’s mine is yours: how collaborative consumption is changing the way
we live. London: Collins.
2. http://www.pwc.co.uk/issues/megatrends/collisions/sharingeconomy/the-sharing-economy-sizing-the-
revenue-opportunity.jhtml

CHAPTER 1 INTRODUCTION
economy during the past 12 months3
, and a recent study in the US suggests that sharers
are not only tech-savvy urban hipsters but also affluent homeowners with children.4
Although the sharing of slack resources leads to the more efficient use of those
resources, the reality is likely to be more complicated, and there is reason to exercise
caution with regard to the Sharing Economy. In the short run, both Airbnb and Uber
have come under scrutiny because of the effects that their business models have had on
their respective industries and because of concerns that they are avoiding certain safety
regulations and taxes. In particular, Uber has been under fire for moving the burden of
risk away from the firm and onto the “consumer” and “employee”. Indeed, when financial
resources are shared, the risk of an individual transaction is not shared only by the parties
to the contract; rather, collaborative finance also entails a certain amount of risk sharing,
or pooling. Thus, one area of concern is the degree to which Sharing Economy firms avoid
transaction costs and risks by pushing such costs and risks onto providers and consu-
mers. Furthermore, scholars and media commentators have questioned the effects of
these startups on the workforce, arguing that they are both a symptom and a cause of
unemployment and underemployment. A Guardian op-ed piece states as follows:
“One big problem with claims that the ”Sharing Economy” can lead the way out
of our economic morass is that proponents often advocate less consumption.
How can that be a solution for an economy that—for better or worse—is fueled
by consumer spending? ... Certainly not the one that could employ significant
numbers of people as designers, sales clerks, warehouse staff and construction
workers and help bring four million long-term unemployed people [in the UK]
back into the workforce.” 5
Thus, although it holds much promise, the emergence of this new “economy” does
not clearly directly create jobs. However, insofar as the Sharing Economy makes the
use of slack resources more efficient, it has been well received. Regarding regulatory
issues, the Sharing Economy may lead to significant legislative challenges because
although regulations may obstruct potential new applications and markets, they may
nonetheless be necessary to curb abuse of market power as new actors emerge. The
development of new regulations should not be taken lightly; more traditional actors
are likely to lobby in favor of the status quo, and even the most well-intentioned regu-
lations may indirectly stifle growth of this nascent field.
This report investigates the following areas: 1) the global development of the
Sharing Economy; 2) current trends in the Sharing Economy in the Swedish context; 3)
the possible expansion of the Sharing Economy in Sweden; and economic and social
implications for Sweden. In addition, this report opens a discussion on policymaking.
3. http://www.nesta.org.uk/publications/making-sense-uk-collaborative-economy
4. http://www.slideshare.net/jeremiah_owyang/sharingnewbuying?ref=http://www.web-strategist.com/
blog/2014/03/03/report-sharing-is-the-new-buying-winning-in-the-collaborative-economy/
5. http://www.theguardian.com/commentisfree/2014/jan/07/sharing-economy-not-solution-to-jobs-crisis

Chapter 2
WHAT IS THE SHARING
ECONOMY?
The Sharing Economy is a broad concept that lacks a common definition, and it is often
used interchangeably with such terms as “collaborative economy” and “on demand”
economy. Rachel Botsman, the author of What’s Mine is Yours: How Collaborative
Consumption is Changing the Way We Live, defines the collaborative economy as “a
system that activates the untapped value of all kinds of assets through models and
marketplaces that enable greater efficiency and access”.6
In line with this definition, the Sharing Economy has been defined to include the
renting, bartering, loaning, gifting, and swapping of assets that are typically underuti-
lized, either because they are lying unused or because they have not yet been mone-
tized. Such assets include a wide variety of tangible and intangible assets (Table 1).
For instance, archetypes such as Airbnb and Uber involve the sharing of tangible slack
resources, namely, cars and homes, whereas crowdfunding and peer-to-peer finance
involve the sharing of a somewhat more intangible resource: money. Finally, services
such as TaskRabbit connect people with free time to people who need small tasks
performed.
What are the Drivers of the Sharing Economy?
The sharing of assets has always been a part of social organizing. However, over the
past decade, several drivers have led to increased Sharing Economy activity and to a
number of startups that promote this behavior.
6. https://archive.harvardbusiness.org/cla/web/pl/product.seam?c=34760&i=34762&cs=902b9545bb85f0aba
03d8b645fb1d7c5

CHAPTER 2 WHAT IS THE SHARING ECONOMY?
TABLE 1. Overview of assets and well-known actors in the Sharing Economy
• Increasing penetration of the Internet and smartphones. Although there are seve-
ral drivers of the Sharing Economy, the Internet and smart phones are the major
accelerants. Indeed, Internet penetration across the globe has risen considerably
over the last two decades, from 16 million people, or approximately 0.4 percent
of the world’s population, in 1995 to an estimated 3 billion, or 42 percent of the
global population, in 2014 (Internet World Statistics, 2015). In addition, data
collected by Google between 2011 and 2013 demonstrate the remarkable regional
increases in smartphone penetration during this period (see Figure 1), and Internet
penetration has no doubt increased even further since 2013.
FIGURE 1. Smartphone Penetration, 2011-2013
Source: Google
Asset Example Actor: International Actor: Swedish
Tangible
Transportation
Property
Food
Uber
Lyft
Car2Go
Airbnb
DeskNearMe
EatWith
Uber
Car2Go
Airbnb
Hoffice
Intangible: Financial
Crowdfunding
P2P lending
Kickstarter
Indiegogo
LendingClub
Prosper
FundedByMe
Kickstarter
Crowdcube
Toborrow
Intangible: Services
Professional
Personal
Innocentive
oDesk
TaskRabbit
eWork
Vint
TaskRunner
MyWays
USA
UK
Sweden
South Africa
Poland
Norway
India
Germany
Finland
China
0 10 20 30
2013 2012 2011
40 50 60 70 80

Although smartphone penetration is a more recent development, the data show a
rapid increase in mobile data use due to smartphones (Figure 2).
FIGURE 2. Average per capita monthly mobile data use 2008-2013.
Source: IHS / Industry data / Ofcom
• Technological advancements in areas such as information technology platforms
and big data analytics. Although the sharing of assets is nothing new, the
creation of two-sided, or matchmaking, market platforms that enable peer-to-
peer communication (i.e., individual-to-individual rather than firm-to-individual
communication) is a novel development. This communication can be mediated
either by firms, such as Uber, that run their own platforms or by individuals who
use existing social networking sites, such as Facebook, or design their own apps,
using open source software, to self-organize their sharing activity in the cloud.
These platforms can connect individuals locally, on a face-to-face basis, or they
may be global, connecting people from all over the world digitally. Thus, they are
more likely to enable a critical mass of suppliers and consumers such that both
sides of the market feel that there is enough demand or choice available, which
previously was a much more difficult task. Furthermore, several startups are
using big data analytics to match supply and demand and even using advanced
algorithms to set prices and predict demand. For example, Uber uses its vast
stores of data to predict where and at what time a customer will want a cab as
well as to raise prices when demand is excessively high.
• Falling entry barriers. Digitalization has created an increased democratization
of entrepreneurship and innovation by reducing entry barriers for app creators
and digital platform providers. It is estimated that the number of people working
in app creation and marketing in the EU will increase from 1.8 million in 2013 to
5 year
CAGR
1 year
change
53%
71%
118%
42%
33%
37%
100%
68%
40%
62%
80%
72%
105%
70%
70%
89%
89%
88%
65%
118%
SWE
JPN
USA
AUS
ITA
NED
GER
UK
SEP
FRA
2500
2000
1500
1000
500
0
2008 2009 2010 2011 2012 2013

4.8 million in 2018.7
Moreover, individuals and firms are taking advantage of this
trend; in addition to EUR 6 billion in app sales and in-app spending, EU developers
earned EUR 11.5 billion in contract labor by developing and maintaining apps to
support non-app firms, such as financial services and retail firms.8
The costs and
risks of starting an IT firm are significantly lower today than at the beginning of the
millennium because the costs of producing, distributing and marketing software
and hardware have declined due to the availability of platforms such as Facebook,
YouTube and Twitter.9
The cost of platform innovation is also low relative to that of
traditional innovation because platform innovators can assemble various existing
plug-n-play components to create new platforms. Furthermore, open source
solutions and cloud services can help to keep development costs down. Thus,
entry barriers to the Sharing Economy are relatively low because individuals can
easily and cheaply create a Sharing Economy service or platform.
• Increased ease of financial transactions. Financial transactions—both over the
Internet and directly between individuals—have been greatly facilitated due to
advancements in digital payment solutions, such as Swish, Klarna, and iZettle,
combined with people’s increasingly positive attitudes toward online payments,
which contrast greatly with the negative, risk-averse attitudes toward online
payments in the late 1990s.
• Increased transparency. Sharing Economy platforms provide transparency
regarding the buyer, seller, and product and therefore have assumed the role
of the “trusted third party” that previously was played by various middlemen
and organizations, both locally and globally. Social media and social networking
sites provide information about individuals, and the rating systems used by
many of these services allow suppliers and consumers to assign ratings to one
another, even in real time. These systems and the accompanying transparency
can encourage openness and trust among strangers, e.g., between the person
renting out his or her house and the complete stranger from across the globe
who rents the house, which may lead to increased generalized reciprocity and
self-regulation.
• The financial crisis. It is not surprising that the financial crisis has been a driving
factor of the Sharing Economy. Whereas the crisis has led many people to seek
alternative sources of employment and income, the Sharing Economy enables
individuals to make money on their tangible and intangible assets that previously
sat idle. For example, a person can rent out his living room couch to a stranger
7. http://ec.europa.eu/information_society/newsroom/cf/dae/document.cfm?doc_id=4485
8. http://ec.europa.eu/information_society/newsroom/cf/dae/document.cfm?doc_id=4485
9. Ries, E. 2011. The lean startup: How today’s entrepreneurs use continuous innovation to create radically
successful businesses. Random House LLC.

from the other side of the globe, and he can even rent out his own free time to
perform odd jobs, such as assembling furniture.
• Declining consumption patterns. We are also seeing more negative consump-
tion behaviors among individuals for a variety of reasons, including reduced
disposable income, environmental and sustainability concerns, convenience,
status, a desire for more social interaction, and a backlash against consumerism
and major brands. Botsman and Rogers argue that individuals are realizing that
owning a product that they will use for only a limited period makes less sense
than merely having access to the product. These authors also argue that there is
an increasing belief in the “commons” and that individuals who provide value to
an Internet community find that their own value grows in return. The environ-
mentalists’ view is that when goods are circulated, the life span of each indivi-
dual item is maximized and extended. However, the term “Sharing Economy”
could be misleading. A recent practitioner study of more than 90,000 individuals
in the US, Canada, and the UK found that convenience was the number one
reason why people participated in the Sharing Economy, outranking better price
and product/service quality. Notably, sustainable lifestyle and a preference for
access over ownership both ranked relatively low on this list.10
FIGURE 3. “How important were each of the following reasons for using a
peer-to-peer site or app for your most recent sharing transaction?” (Asked Dec
2013-Jan 2014)11
10. http://www.slideshare.net/jeremiah_owyang/sharingnewbuying
11. Re-sharers buy and/or sell pre-owned goods online using well-established services like eBay and Craigslist
whereas neo-sharers use emergent sharing services, such as Etsy, Kickstarter, Uber http://www.slideshare.
net/jeremiah_owyang/sharingnewbuying
CONVENIENCE
BETTER PRICE
PRODUCT / SERVICE QUALITY
COULDN’T FIND ELSEWHERE
RECOMMENDATION
SUSTAINABLE LIFESTYLE
CONNECTY ONLINE
CURIOSITY
CONNECT LOCALLY
ACCESS OVER OWNERSHIP
RE- SHARES
NEO- SHARES
OTHER
73%
55%
47%
40%
40%
30%
27%
26%
24%
13%
13%
13%
75%
60%
36%
26%
29%
27%
18%
17%
23%
6%

What Does the Sharing Economy Mean in Economic Terms?
One of the primary aspects of the Sharing Economy is that technology plays a major
role in driving down transaction costs. Firms such as Airbnb and Uber have not crea-
ted some radical new means to satisfy consumers; rather, these firms merely provide
information that makes it much easier for people to find what they are looking for or to
do what they want to do anywhere across the globe, i.e., they lower transaction costs.
Approximately 80 years ago, a young economics professor named Ronald Coase
presented his views on why firms exist in a paper titled “The Nature of the Firm”,
thereby laying the groundwork for the concept of transaction costs.12
He questioned
why all transactions did not occur in the marketplace and argued that firms arose
to minimize transaction costs in a world of imperfect information. Transaction costs
include search and information costs, bargaining costs, and policing and enforcement
costs. Search and information costs correspond to the time spent by the consumer
to search for a good or for information about a good on the market. The more time it
takes to search for a good, the greater the search and information costs. Bargaining
costs are the costs involved in preparing a contract and reaching an agreement with
the other party to the transaction. Finally, policing and enforcement costs comprise
the costs of ensuring that the other party complies with the contract and of legal
action if the other party fails to comply. In short, the lower the search and information
costs, bargaining costs, and policing and enforcement costs are, the lower the transac-
tion costs are.
Digitalization has decreased transaction costs, particularly the costs associated with
search and information. For example, the search and information costs for an online
bookstore, such as Amazon, are lower than those for a physical bookstore because
Amazon consumers can search for books online or even obtain algorithm-based recom-
mendations instead of taking the time to go to a physical bookstore and searching
manually. The decrease in transaction costs in the Sharing Economy is perhaps even
more significant. Whereas Amazon is a digital alternative to a physical bookstore that
maintains a centralized non-digital collection of books, there are often no non-digital
centralized equivalents to Sharing Economy platforms. For instance, a person seeking
to share an empty room in a home or an empty piece of arable land previously had to
search for these slack resources using ad hoc advertising and word of mouth, both of
which are clearly far more time consuming than a digital matchmaking tool.
Bargaining costs are the costs associated with establishing a price for a particular
good or service. Because different goods have different norms in terms of how they
are traded, it is difficult to predict how bargaining costs may be affected by the Sharing
Economy. Indeed, different platforms that trade in different slack resources may
have different price-setting mechanisms. Whereas purchasers of smaller goods have
traditionally been price takers,13
purchasers of larger goods are typically better able
to negotiate prices and may even act as price setters when there is a large amount
12. http://www3.nccu.edu.tw/~jsfeng/CPEC11.pdf
13. Wen, M. (2004). E-commerce, productivity, and fluctuation. Journal of Economic Behavior & Organization,
55(2), 187-206.

of supply on the market. The explanation for this phenomenon is that when there is
a large amount of supply but demand remains constant, the individual demanding
the good has considerable bargaining power. This power should decrease not only
the cost of bargaining but also the cost of the good itself. Thus, an abundance of a
particular good or service on the market creates a situation in which the purchaser
has considerable bargaining power and can drive prices down; when there are many
purchasers in this situation, the average market price for a good or service is driven
downward. Accordingly, not only is the manner of consumption changing, but the cost
of consumption is changing as well.
Policing and enforcement costs are the costs to monitor an ongoing transaction
and to ensure that the other party is keeping to its side of the bargain. Typically, in
straightforward and small transactions, such policing and enforcement costs are low;
however, these costs increase with the size and complexity of a transaction and thus
also vary by sector. Monitoring costs typically decrease as the amount of information
available to transaction parties increases; rating systems and user reviews there-
fore form an invaluable source of information for prospective transaction partners.
Enforcement costs increase proportionally to the complexity of the transaction; thus,
although electronic payment systems often decrease enforcement costs, the fact that
many Sharing Economy transactions are conducted through forms that are relatively
unknown or poorly understood in legal terms is likely to increase enforcement costs,
at least during the Sharing Economy’s nascent years.
Creative destruction, a term coined by economist Joseph Schumpeter in 1942,14
refers to the process whereby the creation of a new industry or method of doing
things destroys the industry or process that preceded it. Although creative destruc-
tion is evident in obviously comparable industries (for example, the replacement of
tapes by CDs and DVDs), this process is less obvious in the Sharing Economy, primarily
because it is not clear which industries and/or processes the Sharing Economy is likely
to replace. Indeed, although incumbents in the hotel and taxi industries have been
forced to innovate to survive, neither the industries nor their processes have been
“destroyed” by the advent of sharing. Rather, older innovations have been connec-
ted to digital services through social networks with, for example, a marketplace or
“thing” (i.e., the Internet of Things, or IoT). Such novel elements bring greater benefits
to users, which often leads to the destruction of old practices, but in this case will
not necessarily lead to the destruction of old products and services. Thus, sharing
occasionally serves as an alternative—and even a complement—to existing industries.
Our Definition of the Sharing Economy
The above discussion enables us to develop a working definition for the Sharing
Economy (See Figure 4). Our definition overlaps considerably with that of Botsman but
is more pragmatic for the purposes of this report: the Sharing Economy comprises the
14. Schumpeter, J. A. (2010). Capitalism, Socialism and Democracy. Routledge.

peer-to-peer exchange of tangible and intangible slack (or potentially slack) resources,
including information, in both global and local contexts. This mediated exchange tends
to reduce users’ transaction costs by replacing third party intermediaries with digital
platforms; however, transactional risks are often borne by the providers and consu-
mers of these resources rather than by a central actor.
FIGURE 4. The definition of the Sharing Economy used in this report
IntangibleTangible
LocalGlobal
Sharing
Economy
Information

Chapter 3
THE GLOBAL SHARING
ECONOMY
Below, we discuss the areas in which the Sharing Economy has thus far had the grea-
test influence on the sharing of tangible and intangible assets and provide examples of
Sharing Economy platforms in each area. This list is not meant to be exhaustive; rather,
the intent is to give the reader some insight into the different services and how they
function.
Tangible Assets
Sharing Cars
Uber was founded in 2009 in San Francisco and today has a valuation of USD 41 billion
and operates in 250 cities. Uber involves the sharing of rides, or cars; people who own
cars are connected to people who want a ride somewhere via the Uber mobile applica-
tion that is installed on the phones of both riders and drivers. The phone, in turn,
relies on the open access maps created by Google as well as its own GPS technology
to connect ride purchasers with the nearest available ride (Figure 5). Once the ride
is over, the rider’s credit card on file with Uber is automatically charged for the ride
and thus the driver does not need to handle any payments. After the ride, riders and
drivers rate each other.
According to recent figures from the New York City Taxi and Limousine Commission,
Uber cars now comprise the majority of taxis in New York City. Specifically, these data
indicate that there are currently 14,088 Uber cars in New York City, compared with
13,587 yellow cabs.15
15. http://www.unt.se/ekonomi/uber-har-tagit-over-new-york-3647082.aspx

CHAPTER 3 THE GLOBAL SHARING ECONOMY
FIGURE 5. Uber screenshot
Uber first offered its services to off-duty taxi drivers who had licenses to operate taxi-
like services before expanding to include individuals who did not have taxi licenses
but did have cars. This helped Uber to price discriminate; not only would the company
provide a taxi-like service to those who might otherwise pay the same price for an
ordinary taxi, but it would also provide a less expensive service that catered to a mar-
ket that was unwilling to pay the same high price for the same service. The general
logic behind price discrimination is that the ability to distinguish between those willing
to pay different prices enables one to tap a larger market, which in turn generates
larger profits, higher welfare and a reduction in deadweight loss.
Furthermore, in expanding its business model to include ridesharing, the firm relied
on the notion that the expanded “ridesharing” model was sufficiently different from
a taxi service to render the laws regulating taxis in various jurisdictions inapplicable.
Unsurprisingly, many incumbent taxi firms disagreed. Moreover, among the cases that
have been litigated, several courts have interpreted the existing laws in a manner
unfavorable to Uber’s ride sharing model.
In addition, there has been a public outcry, particularly in the United States, over
Uber’s treatment of the ride providers. Because Uber provides only a mobile plat-
form, the company’s position is that it does not employ anyone; rather, Uber merely
connects willing purchasers of rides with willing sellers. As many commentators have
noted, Uber’s model raises questions about the applicability of labor regulations and
competition laws; Uber argues that it facilitates exchanges between purchasers and
individual drivers who are not employees of Uber but rather are self-employed inde-
pendent contractors. However, the line between employee and independent contrac-
tor is unclear, especially when one considers the fact that Uber centrally establishes
standards of service, prices and other conditions for its ride providers.

Uber sees itself as a technology firm rather than a transportation firm because its
success is based on a simple user interface and an advanced information system that
conducts big data analytics. The firm is currently moving into other areas, such as food
delivery; it recently started delivering pizzas in Barcelona.
Sharing Rooms and Land
Founded in 2008, Airbnb currently boasts over one million listings—including 600
castles—in 34,000 cities in 190 countries across the globe. Its operating model is to act
as an intermediary between those who have empty rooms or apartments and those
who would like to rent them. For this service, Airbnb charges a fee of six to twelve
percent of the rental amount, which is set by the owner of the room or apartment.
Airbnb verifies hosts’ and renters’ identities but does no further screening. Instead, it
relies on reviews by parties to previous Airbnb transactions to act as a quality control
and to give future participants information upon which to base their decisions.
Airbnb’s apparent intention is to act as a central pooling area where renters and
owners can meet. By relying on reviews by verified customers, Airbnb avoids the
costly process of screening individual apartments and users and instead only verifies
users’ identities. This peer-to-peer exchange of information is vital for Airbnb insofar
as it both lowers the company’s operating costs and operates as a screening device.
Indeed, the review system has engendered self-regulation among Airbnb’s users.
Similar to the development of eBay, the development of Airbnb has fostered the
creation of a new type of job. Specifically, there are now independent agents who
earn fees by photographing and describing properties and creating Airbnb accounts
for owners.
Unlike Uber, Airbnb has not been accused of entering into employment relations-
hips with the individuals who list properties on its platform; Airbnb does not centrally
set prices and no service is implicit in its operating model. However, the firm has come
under fire from hotel groups and governments across the globe, for several reasons.
First, some cities, such as New York, have laws that prohibit owners or occupants from
renting out their apartments for short periods (less than 30 days) unless they are also
living on the premises.16
Second, many cities, including Amsterdam, Barcelona and
Los Angeles, charge “tourist taxes”, which are typically included in the cost of renting
a room in a hotel. Finally, hotels and other commercial rentals must comply with local
safety laws, whereas owners that rent properties on Airbnb are not necessarily subject
to these laws.
For the most part, the problems and resistance that Airbnb has faced have been
resolved amicably. For instance, in Amsterdam, tourist taxes are now included in
Airbnb’s service charge and periodically transmitted to the relevant local authority.
Airbnb also periodically sends hosts links and information regarding local regulations,
16. http://www.nytimes.com/2012/12/01/your-money/a-warning-for-airbnb-hosts-who-may-be-breaking-the-
law.html?_r=0

although compliance with these local regulations—including safety regulations—
remains the responsibility of the host.17
Landshare operates on a principle similar to that of Airbnb but facilitates the sharing
of unused arable land in the UK, Canada, and Australia. The Landshare platform allows
those who are looking for land, those who have land to lease and “helpers” to upload
details of their ideal transactions and to connect with one another. The site operates a
map on which users can pinpoint their location, along with a description of what they
are seeking.
Unlike Airbnb and Uber, Landshare encourages people to enter into explicit agre-
ements outside of the platform. Whereas the terms and conditions of the more typical
home- and car-sharing transactions are fairly standardized, it appears that Landshare
anticipates that the transactions conducted on its platform will vary so widely that the
users must develop and enter into contracts themselves. Although Landshare provides
a pro forma agreement that users can adapt to their own specific purposes, it offers
no legal advice. In addition, also unlike Airbnb and Uber, Landshare performs no scre-
ening process; it does not check the identity of the parties to the transaction and does
not verify ownership of or usage rights to the land involved. In addition, there is little
talk of remuneration online, which suggests that discussions regarding remuneration
occur offline.
Because Landshare does not participate in the transaction, the service provided
by Landshare is much closer to an intermediary service than the services provided by
Airbnb and Uber. However, Landshare does not charge its users any form of operating
fee. Rather, Landshare essentially operates to ensure that slack resources are used and
does not provide an alternative source of employment to its users, unlike Airbnb and
Uber. Therefore, although Landshare is clearly an example of the Sharing Economy
insofar as it involves sharing and the creation of economic value, its role is somewhat dif-
ferent—and, consequently, less problematic—than the roles played by Airbnb and Uber.
Intangible Assets
The sharing of slack resources is not reserved for tangible consumer and durable
goods. On the contrary, the sharing of intangible resources—notably, money and
information—has also grown enormously. This section discusses a number of major
global trends in the sharing of intangible resources.
Sharing Money
Crowdfunding has been described as an open call made through the Internet to obtain
financial contributions from a relatively large number of individuals with limited
17. http://www.iamsterdam.com/en/media-centre/city-hall/press-releases/2014-press-room/amsterdam-
airbnb-agreement

involvement of standard financial intermediaries.18
In 2014, crowdfunding expanded
globally by 167 percent, raising USD 16.2 billion on 1250 platforms, compared with
USD 6.1 billion in 2013. It is expected that the industry will double in size once again in
2015, generating USD 34.4 billion.19
The idea behind crowdfunding is that by appealing to a global community (the
crowd), anyone who has access to the Internet may fund a new venture idea using
slack resources. This concept is premised on the notions that the crowd can screen
ideas at least as well as any professional investor and that the money of an individual
investor may be better invested in a local project in which the investor believes than
in an abstract mutual fund.
There are four forms of crowdfunding.20
The first is donation-based crowdfunding,
in which actors donate to a project and receive an intangible reward, such as a “thank
you”, in return. The second form is reward-based crowdfunding, in which donations are
made in exchange for a symbolic reward, e.g., a prototype or limited-release version of
a service. Kickstarter and Indiegogo are among the most internationally well-known
examples of platforms that provide this type of entrepreneurial match-making service.
Neither Kickstarter nor Indiegogo screens the projects that are presented on their
respective platforms; rather, they rely on the assumptions that project owners can
link their projects to their Facebook accounts to provide legitimacy and that potential
investors can ask questions publicly on these platforms. These features provide a form
of transparency because would-be investors can screen potential projects using a
combination of third-party verification and reviews, which makes both platforms self-
regulating. Both Kickstarter and Indiegogo charge a percentage of the funds raised for
a project to list on their respective sites.
The third form of crowdfunding is equity-based crowdfunding, wherein individuals
purchase equity shares in an organization via a digital crowdfunding platform, and
those shares and shareholders are managed either by the platform or by the orga-
nization in which shares are sold, depending on the platform and country in ques-
tion. Crowdcube, a UK firm, is the best known equity-based crowdfunding platform.
Crowdcube sells equity shares in unlisted firms and does both credit and criminal
background checks on individuals who wish to list their businesses on Crowdcube’s
platform.
Peer-to-peer lending and micro loans are often described as the fourth form of
crowdfunding. In this crowdfunding form, organizations or individuals borrow from
investors through an online campaign and lenders’ commitments are ultimately
repaid, usually with interest.21
Some of the most internationally well-known platforms
for this type of crowdfunding are the US-based Prosper, which runs a for-profit model
18. Ingram, C., Teigland, R., & Vaast, E. (2014). Solving the puzzle of crowdfunding: Where technology
affordances and institutional entrepreneurship collide. In System Sciences (HICSS), 2014 47th Hawaii
International Conference on (pp. 4556-4567). IEEE.
19. http://www.crowdsourcing.org/editorial/global-crowdfunding-market-to-reach-344b-in-2015-predicts-
massolutions-2015cf-industry-report/45376
20. Baeck, P., & Collins, L. (2013). Working the Crowd: A short guide to crowdfunding and how it can work for
you. London: Nesta.
21. Baeck & Collins (supra)

of peer-to-peer lending, and Kiva, which runs a near-philanthropic service that is
aimed at providing loans to people in developing countries.
All of these forms of crowdfunding operate within the Sharing Economy to ena-
ble individuals to invest slack financial resources into projects in which they believe,
whether through equity investments, donations or the pre-purchase of goods.
Sharing Time
TaskRabbit positions itself as facilitating an “old school concept: neighbors helping
neighbors”. What this means in practice is that TaskRabbit helps people to find other
people to perform small services, from running errands and moving furniture to trans-
cribing interviews. The firm acts as a platform whereby service providers (“taskers”
or runners) can post online profiles in which they advertise the tasks for which they
are available and provide reviews from previous purchasers. Purchasers can then find
appropriate runners based on the tasks advertised and the city in which both indivi-
duals are based. TaskRabbit argues that it helps people find short-term employment,
which in turn helps these people to pay bills that they would otherwise be unable to
pay. However, in the words of Bloomberg, “TaskRabbit is betting on a future where
employment will seem much more like a series of small-scale agreements between
firms and labor than jobs in the traditional sense”.22
In such a future, secure jobs would
not exist; there would be only a series of short-term agreements between individuals.
This task-sharing site began as an auction- and negotiation-based platform, where
individuals seeking runners to complete tasks could bid and negotiate online for that
person’s time. However, in June 2014, the auction model was replaced by one in
which those selling their time set an hourly rate. Bloggers and news articles described
the modification as a move from the Ebay model to the Uber model, and there was
considerable backlash from both taskers and service purchasers.23
This unhappiness
stemmed from the removal of the bidding function as well as a number of other
changes incorporated by the firm. For instance, the firm implemented an algorithm
that automatically matched taskers with a purchaser based on information about the
required task, including when and where it was needed. This algorithm provides the
purchaser with a selection of three taskers with different hourly rates and experience
levels and allows the purchaser to communicate with the chosen tasker via an in-app
messaging service.
Like Airbnb, TaskRabbit allows service providers to set their own hourly rate, which
is publicized upfront, and the firm takes a 20 percent service fee, which includes insu-
rance. Service providers’ profiles include reviews by purchasers, and TaskRabbit also
conducts identity checks and in-person interviews before allowing a person to offer
services on the platform.
22. http://www.bloomberg.com/bw/articles/2013-05-24/in-the-future-well-all-be-taskrabbits
23. See http://techcrunch.com/2014/07/10/taskrabbit-debuts-revamped-platform-launches-new-website-
and-mobile-apps/

TaskRabbit was not subject to much controversy until it moved away from the auction
model. Both taskers and purchasers were unhappy and argued that the new model did
not allow people to manually search for taskers and that the algorithm only brought
up taskers with consistently high review scores. Moreover, at the same time as the
algorithm implementation, TaskRabbit focused on making it easier to connect to tas-
kers who performed common tasks, such as house cleaning or furniture assembly, to
the detriment of those who were searching for, and those who were providing, more
unique niche offerings.
Under both the new and old models, the risks and costs of transactions are
absorbed by the service provider. For instance, the platform currently holds service
providers responsible for adding VAT when required and for addressing their own
tax issues. Although it might be unreasonable to hold TaskRabbit responsible for the
tax issues of every service provider who uses its platform, many individuals offering
services on TaskRabbit are paid a low wage for a short-term job that is typically menial
in nature. Is moving the burden of tax compliance onto the small service provider too
onerous, given that it requires service providers not only to specialize in and advertise
their particular niche services but also to learn all of the ins and outs of their local tax
regulations? Placing this substantial burden on a single individual seems not only unfair
in some respects but also inefficient. Today, large firms employ individuals to conduct
specialized tasks—and only those tasks—which frees those with other specialties to
do the same, increasing overall productivity. What happens to worker productivity
when the workers must divide their time between numerous tasks, many of which are
outside their area of expertise?
Time Banks, or time sharing, might be described as the philanthropic equivalent
of TaskRabbit; that is, a time bank is a network of not-for-profit local nodes, wherein
individuals in a community submit requests and offers for help. The premise is that
a time bank is a community-building system and that no one charges for the help
provided by him/her. Instead, individuals voluntarily help each other with childcare,
elderly care and creative projects. Although this venture is clearly a component of the
Sharing Economy, it is difficult to compare it with the previous examples because it
does not provide new forms of employment.
Information and Influence
Information and knowledge are key to the operations of all of the above-described
platforms because information and knowledge enable the users of a particular plat-
form to self-regulate, which limits the amount of screening that must be performed
by the firm running the platform. This fundamental part of the Sharing Economy—the
reduction of transaction costs—is often used on its own to improve transaction deci-
sions by consumers. Examples include the service-provider review service Yelp and
the tourism review service Tripadvisor. Neither Yelp nor Tripadvisor provide any services
themselves (although Tripadvisor has recently branched out into flight and hotel price
aggregation), but rather they allow users to share a wealth of information that helps
consumers to find the lowest price for an item and to screen goods and services.

Klout is an example of a mobile app that can be used to share information about one’s
social influence on the Internet. The app was launched in 2008 and uses data from
multiple social networks, including Bing, Facebook, Foursquare, Google+, Instagram,
LinkedIn, Twitter, and Wikipedia. The data are used to create Klout user profiles, and
social media analytics are used to rank the users. Users are ranked according to their
online social influence and assigned a “Klout Score” between 1 and 100. The higher
the score is, the higher is the user’s ranking in breadth and strength of online social
influence.

Chapter 4
THE SHARING
ECONOMY IN SWEDEN
The Sharing Economy seems to be growing at more or less the same pace in Sweden
as in other European countries, with certain areas, such as finance, growing faster than
others (e.g., crowdfunding). International names such as Uber, Kickstarter and Airbnb
are either established names in Sweden or on their way to becoming established. While
the American time- and task-sharing giant TaskRabbit has not entered the Swedish
market, local alternatives have arisen.
On the whole, the Swedish market for various Sharing Economy goods and services
is fragmented and less developed than elsewhere in Europe. The Swedish market has
also taken on a unique character in other respects; for instance, a number of home-
grown services in Sweden tend to justify sharing on the basis of sustainability, rather
than cost-effectiveness or efficiency. In addition, existing private firms and large state
institutions have become involved in the Sharing Economy, whether by forming part-
nerships to drive an initiative, such as SpaceTime.se, or by running sharing initiatives
that rival their own business model, such as Hertz running the ridesharing service
Roadmate.se. As elsewhere, the principle guiding force in the Swedish context has
been access over ownership.
Many of the Swedish platforms that support Sharing Economy activities are run by
non-profit organizations and are supported by networks of volunteers. Several sites
were started by students who, due to their low budgets, must “do more with less”,
e.g., Skjutsgruppen.se and hoffice.se. The few organizations that are profit based
have low revenues and few employees and thus do not contribute significantly to
economic growth in terms of taxable revenues and new jobs.
No single firm, with the possible exceptions of FundedByMe and Trustbuddy, has
truly captured the market. Instead, we find that a number of small Swedish firms and
several international entrants are competing with each other for market share. This

CHAPTER 4 THE SHARING ECONOMY IN SWEDEN
is both good and bad for the development of the Sharing Economy in Sweden. On
the one hand, high levels of competition force competitor firms to fine-tune their
offerings, which improves users’ experiences. On the other hand, there are limited
network effects to be had when the users and providers of goods and services are
spread across a number of platforms. The multiplicity of platforms means that the
distribution of shared resources is not as efficient as it might be, which is likely to have
implications for productivity.
Tangible Assets
The sharing of tangible assets is the most well-developed area of the Sharing Economy
in Sweden, with a number of local and international actors participating in this area.
Sharing Cars
One study has shown that the average Swedish car is parked 23 out of 24 hours each
day and that, during the typical 12,000 kilometers driven annually by Swedish citi-
zens, the average occupancy per car is 1.5 people.24
One study in Umeå found that on
average, each car travelling in the Umeå region carries 1.2 people while one calcula-
tion suggests that if a person who commutes 50 km each day were to carpool, he or
she would save up to SEK 40,000 a year. These savings might even be greater today
given the tax-deductible travel allowance of SEK 10,000 per year.25
There is a long list of ridesharing sites in Sweden,26
the most well-known of which
are Bilplats.se (founded in 2007), Skjutsgruppen.nu (2007), and Samåkning.se. In
addition, there are a number of local ridesharing systems, such as mobilsamakning.
se, which operates in at least 10 regions in Sweden,27
as well as locally organized
Facebook groups, such as En Ropsten, which caters to individuals living on the island
of Tranholmen in the Stockholm region.
The non-profit Skjutsgruppen.nu was founded by student Mattias Jägerskog and
initially used crowdfunding to grow. Today, the group has over 40,000 users who
rideshare all over Sweden. Users self-organize in terms of arranging trips and fees.
Most trips occur on Fridays and Sundays, either within the larger cities or between
cities: Stockholm to Gothenburg, Gothenburg to Stockholm, Stockholm to Malmö,
Malmö to Stockholm, Gothenburg to Malmö, Uppsala to Gothenburg and Stockholm
to Jonkoping. Data provided by Skjutsgruppen indicate that the longest journey in
2013 went from Malmö to Arvidsjaur and that the total distance of all trips made
through Skjutsgruppen in 2013 was 306,475 km, enough to circle the earth seven
times.28
The group is managed by a group of 50-100 people who volunteer in various
24. http://www.svd.se/naringsliv/digitalt/uber-satsar-pa-betald-samakning_3871646.svd
25. Åk tillsammans - spara 40,000 om året, LAND 2015-01-02
26. http://www.gronabilister.se/lankar/att-samaka
27. http://www.mynewsdesk.com/se/pressreleases/mobilsamaakning-utsaags-till-aarets-
landsbygdsinnovation-702509
28. 40,000 samåker för att spara pengar och miljö, DAGENSETC 2014-03-21

contexts.29
Today, the organization cooperates with local governments (länsstyrel-
ser) in Västernorrland and Örebro and with organizations such as Be Green Umeå.
Furthermore, the organization created Carpool Europe in 2010 as an international
branch for travel in Europe. There is now a Skjutsgruppen app and the group has
an open API. Although cars remain the most common mode of transportation on
Skjutsgruppen, the site can also be used for other vehicles, such as boats and buses.
In addition, there are a number of national and local car-sharing organizations and
activities in Sweden,30
the oldest of which is Sambil, a non-profit organization now in
its 36th year that operates in a growing number of cities, including, as of May 2014,
Västerås, Gothenburg, Norrtälje and Sala. Members lend their cars to one another
and the association facilitates agreements between members. There are also coope-
ratives such as Bilcoop, which operates in Stockholm, Uppsala, Lund, Gothenburg and
Oslo. Bilcoop facilitates and manages bookings and provides administrative and other
services.
For-profit car-sharing organizations include Car2Go, Bilpoolen.nu, SunFleet, and
City Car Club (previously Statoil Bilpool). Membership in these organizations gene-
rally involves a membership fee, service, parking, and the option to pay by the hour.
SunFleet was founded at the end of the 1990s as a cooperative venture between
Volvo and Hertz. SunFleet uses only green vehicles and, according to its website, it
operates Sweden’s largest carpool fleet, with more than 1,000 cars in 40 cities across
Sweden. Members can choose between two membership plans and then pay for cars
based on time and kilometers driven, for example, SEK 35/hour and SEK 2/kilometer
for the smallest car. Bookings are made online and the car is unlocked using a mobile
app. SunFleet has been active in creating partnerships and today participates in 11
partnerships with firms including Airbnb and mathem.se.
Flexi Drive, another for-profit car sharing firm, was bought by Schibsted
Tillväxtmedier in 2013 and employs two people. Its slogan is ”Rent a neighbor’s car”,
anditsplatformisusedtorentcars,motorhomes,andcaravansamongpeers.Bookings
are made on the site by the drivers and owners, who enroll through Facebook or the
Flexi Drive site, and the transaction is completed between the individuals, who then
rate each other. The firm takes a 10-20 percent commission, depending on the vehicle,
and the price includes full insurance on the car. The firm has experienced slow growth,
with earnings of SEK 69,000 and SEK 100,000 in in 2012 and 2013.31
Uber offers several products in Stockholm and Gothenburg that are differentiated in
terms of car quality and price, including UberLux (luxury, higher-end cars such as new
Mercedes and BMWs), UberBlack (standard higher-end cars), UberX (smaller lower-
end cars) and UberPop (any type of car). In addition, the company added UberBoat
(for the sharing of boat rides) in the summer of 2014. UberPop, which was launched
in September 2014, allows anyone who owns a car to drive for Uber and, according to
29. http://na.se/ekonomi/1.2127952-han-tror-pa-delandets-ekonomi-i-vardagen
30. http://www.gronabilister.se/lankar/att-dela-bil-bilpooler
31. http://internetworld.idg.se/2.1006/1.552830/nasta-steg-for-flexidrive

Uber, is 60 percent less expensive than taking a taxi. This works in a manner similar to
the ridesharing alternatives described above, except that the logistics and payments
are arranged by Uber on its platform. Furthermore, Uber has established certain
requirements for drivers and vehicles; for example, drivers must be 21 years old, have
had a driver’s license for more than three years, and undergo a background check. In
addition, Uber conducts interviews and trains the drivers. The car must be a 2005 or
later model, have four doors, and have passed inspections by both Swedish authorities
and Uber. Uber also requires that its drivers have full liability insurance.32
In September 2014, students at the Stockholm School of Economics compared the
prices of an average 15 min, 10 km trip in Stockholm and Gothenburg between Uber’s
offerings and traditional taxi services (Table 2) and found that UberX services were
cheaper.
TABLE 2. Comparison of taxi services
The students also compared the cost of Uber’s cheapest service, UberPop, to the cost
of public transportation in Stockholm (SEK 36 per trip) and in Gothenburg (SEK 25
per trip). They found that for one passenger, public transportation was less expensive
than UberPop, but if the ride included four passengers, then UberPop’s prices were
competitive with public transportation.33
Uber-Pop still exists in Sweden but has been outlawed in Spain, Germany, France,
the Netherlands and Brussels.
Sharing Rooms and Land
The sharing of parking spaces through sites such as JustPark,34
where individuals can
rent out their parking spaces, is growing across the globe. In Stockholm, certain spaces
32. http://www.svd.se/naringsliv/digitalt/uber-satsar-pa-betald-samakning_3871646.svd
33. UberPOP: Marketing Plan: Launching UberPOP in Stockholm & Gothenburg, SSE Managing Marketing
Processes: A.B., Luksep, A. Jin, C. Källstrand, C. Can Orhan, N.Wesley-James, R. Dee.
34. https://www.justpark.com/
Taxi company Start price Time price Km price
Total fee
(10km, 15min)
Taxi Gothenburg 45kr 8.30 kr/min 12.71kr/km 297kr
Taxi 020 39kr 7.60/min 9.60/km 249kr
Taxi Stockholm 45kr 7.40/min 9.20kr/km 248kr
Taxi Kurir 42kr 7.20kr/min 9.10kr/km 242kr
Uber X 40kr 5.65kr/min 7.45kr/km 199kr

are available for just SEK 10 an hour. Parking garages are also exploring how they can
facilitate the rental of parking spaces by their monthly owners. Although it is not a sha-
ring service, Garage Koll provides information from parking firms, municipalities and
property owners about vacant monthly garage spots throughout Sweden. Another
Swedish startup that provides a similar service is Apparkingspot.com.
The number of co-working spaces, or “third spaces”, in Sweden is also increasing.
Stockholm hosts Impact Hub Stockholm, United Spaces, SUP46, Epicenter, The
Castle, and Entreprenörskyrkan. United Spaces charges a membership fee, and the
price of the space depends on the desired access, in terms of visits and facilities.
Although many of these co-working spaces are privately owned and run, public spaces
have become increasingly important. For instance, a project supported by Vinnova
called Allmänna kontoret established a co-working space prototype in the Hässelby
Gård public library located south of Stockholm.
One of the more interesting concepts is Hoffice, a portmanteau of home and
office, which was launched in 2013 and has expanded to multiple locations across the
globe after several articles in the international press, including Fast Company (Figure
6). Hoffice’s concept is based on a group of freelancers who rotate the hosting of an
“office” at their homes for free. However, Hoffice differs from many other similar orga-
nizations in that members follow a structured work approach that is based on research
showing that people cannot concentrate for more than 40 minutes at a time. People
start work with a check-in and state what they want to accomplish during the day.
They then work in 45-minute shifts followed by short breaks to exercise or meditate,
which is followed by a brief check-in of their progress.35
FIGURE 6. Hoffices across the globe
35. http://www.fastcoexist.com/3041322/hoffice-turns-your-apartment-into-a-free-and-incredibly-
productive-coworking-space#1

A Swedish competitor in this area is Workaroundtown, which is a platform for firms to
hire out their extra space, whether it be an office or an unused meeting room.
The travel and housing sector of the Sharing Economy has also seen modest growth
as Swedes use international platforms, such as Airbnb, as well as more local swap-
ping alternatives. As of April 2015, there were 1008 properties across Sweden listed
on Airbnb at an average daily rate of SEK 960. Daily rates ranged from SEK 88 for a
couch in someone’s living room in Stockholm to SEK 10,500 for a small one-bedroom
apartment in the Old Town. Monthly rentals are also listed, including apartments in
central Stockholm available for SEK 20,000 per month.
There are also several house exchange platforms that operate both in Sweden
and abroad. On Hembyte.nu (homeexchange.com), a global platform spanning 150
countries,36
there are 992 Swedish homes listed. Intervac-homeexchange.com has
houses in 50 countries, including 340 houses in Sweden. Bostadsbyte.com (homelink.
com) has approximately 100 sites in Sweden and offers exchange opportunities in
more than 80 countries. Other sites include semesterbyte.com and fritiden.se, as
well as a site on Blocket.
Sharing Small Consumables
There are no real global players that facilitate the sharing of small consumables. Our
suspicion is that the local nature of small consumables means that there is little upside
for a large global company to operate in this area. Several local initiatives and Swedish
platforms exist, such as Delbar, Grannsaker, Swinga Bazaar, and Tjikko, but there does
not appear to be one well-established national player. The platform off2off primarily
targets public sector organizations and recently established a partnership with Ragn-
Sells (one of the companies active in the Circular Economy 10037
), whereas a library
in Malmö, Garaget, lends out small goods such as tools, sewing machines, and board
games. Another interesting example is Fritidsbanken, which lends out sporting goods
at no cost to children and youth to encourage them to be active while considering the
environment.
Clothing
Clothing is another area where there has been considerable activity, but few initiati-
ves seem to be sustainable. Sites such as kladbytardag.nu and kladbytardagar.se list
clothes-swapping events throughout Sweden. The site kladbyte.se lists approximately
14,000 items. In addition, a variety of stores are experimenting with new business
models. For example, Swopshop has approximately 800 members and utilizes dif-
ferent prices for its garments, including cash and “green hearts”, which members
receive for donating clothing.
36. 26 tips! RES & BO GRATIS och mer - bil, upplevelser, nöjen , EXPRESSEN - SÖNDAG 2014-06-29
37. http://www.ellenmacarthurfoundation.org/business/ce10

Malmö had a klädoteket where one could borrow clothes for free, but it closed
in March 2015 after four years of operation.38
Gothenburg’s site has also closed.
Lånegarderoben39
is similar to klädoteket, but has not yet opened any sites.
Local initiatives, such as Wear Wise, are considering textile recycling. In particular,
Wear Wise is exploring how to create networks to recycle clothing. Its project Retextile
stemmed from a previous project, Studio Redesign of Borås, and aims to enable the
recycling of textiles in larger volumes.
Established brands are also becoming interested in the Sharing Economy. For
example, in February 2015, Filippa K launched the concepts “Lease” and “Collect”
as part of the firm’s sustainability program. The “Lease” concept enables customers
to rent clothing items from the current collections, such as suits, dresses and acces-
sories, primarily for special occasions. With “Collect”, customers receive a 15 percent
discount when buying new clothes if they return their old clothes in fair condition, that
are then offered either for resale at Filippa K’s second-hand store in Stockholm or for
donation to Stadsmissionen.40
In the US, sites such as Vinted and Poshmark41
have grown quite rapidly. These
sites enable people to borrow clothes directly from each other without having to go
through a store. Poshmark has even started to authenticate luxury goods. However,
it does not appear that a site of this type has made it to Sweden. Instead, teenagers
in Sweden have started their own Facebook groups for swapping, sharing, and selling
clothing.
This spring, Uber organized a spring cleaning campaign in which individuals
could arrange for an Uber car at no cost to collect used clothing for donation to
Stadsmissionen in Gothenburg and Sweden.
Tools
A drill is often used as an example of what can be shared in the Sharing Economy.
However, a search revealed very few services of this type in Sweden. In Malmö,
ToolPool allows individuals to borrow tools for free. In Kiruna, this sharing can occur
through a tenant union (Hyresgästföreningen) if one is a member.
Used Goods
It is no surprise that there are numerous sites for swapping, donating, and selling used
goods. Blocket is one of the largest sites for sales and exchanges; this site combines
peer and business advertisements and allows individuals and firms to advertise a wide
range of items: from houses to puppies to second hand clothes. Sites offering goods
for free include bjussa.se, bort.nu, bortskankes.se, and syndattkasta.se. In addition,
38. http://kladoteket.se/
39. http://www.lanegarderoben.se/
40. http://makeitlast.se/2015/02/18/filippa-k-launches-three-sustainability-concepts/
41. http://techcrunch.com/2014/12/04/poshmark-hits-100m-in-annual-revenue-for-its-fashion-resell-biz-
begins-luxury-goods-authentication/

there are several local community Facebook groups through which community mem-
bers borrow, swap, donate, and sell just about anything.
Bikes
Bike sharing is a major global trend and is often launched as a government initiative to
highlight the importance of sustainability. Several local actors exist in Sweden, such as
LundahojinLundandStyr&StällinGothenburg.InStockholm,Citybikesisacollabora-
tion between the city of Stockholm and Clear Channel that launched in 2006. Citybikes
enables people to share bikes through its system, and there is some discussion about
integrating this program with SL, the public transportation system. Individuals can buy
a season pass for SEK 250 or a 3-day pass for SEK 165, which allows them to borrow a
bike for up to three hours at a time from one of 140 spots in Stockholm.
Intangible Assets
Sharing Money
Sweden leads the way in the area of finance and particularly in crowdfunding and
has a number of Swedish and international actors. FundedByMe, a Swedish firm, is
a one-stop shop that offers all four crowdfunding services: donation, reward, equity,
and lending. Founded in Sweden in 2011, FundedByMe now has 18 employees
and is located in eight countries; locations are primarily in Europe but also include
Singapore. The firm charges 6 percent of the amount raised for donations and
rewards. More than 51,000 individuals have registered as members and have pled-
ged more than SEK 60 million. In 2013, the firm generated sales of SEK 2.2 million and
a net turnover of SEK 8.3 million Another significant Swedish crowdfunding platform
is Crowdculture, which uses the donation and reward model to help individuals in
creative industries to raise funding. International players Kickstarter and Indiegogo
are also active in both donation- and reward-based crowdfunding and Crowdcube in
equity-based crowdfunding in Sweden.
Peer-to-peer lending is the fastest growing sector in this area, and international
players are becoming more interested in entering Sweden. For example, Finnish firm
Fixura is launching a subsidiary in Sweden. However, Swedish platforms have a com-
petitive edge over foreign players; ToBorrow, a peer-to-business lending platform, has
been operating since 2014 and Trustbuddy, a peer-to-peer lending platform, has been
operating since 2010 and has since expanded into other European markets.
Sharing Time
There are numerous services in Sweden that facilitate on-demand help, ranging
from simple matchmaking sites such as Grannar.se to commercial platforms such as
Helpling, Hinnerdu, TaskRunner, and Urbit.
Helpling is a cleaning service app that connects cleaners to those looking for clea-
ning services. The company has earned approximately EUR 540 million and aims to be

the leading global IT platform for cleaning services. Helpling currently has subsidiaries
in Germany, France, Holland, Austria, Sweden, Italy, Spain, Brazil and Canada and has
plans to expand into Australia, Singapore and the United Arab Emirates. The Swedish
firm is based in Berlin, where Rocket Internet, one of the company’s investors, is based.
TaskRunner is a Swedish platform launched in autumn 2014 that enables people to
find other people who can help them with small tasks, such as assembling IKEA furni-
ture, drilling holes, delivering roses or ironing shirts. According to TaskRunner’s CEO,
the network comprises approximately 600 “runners”, many of whom are university
students but which also includes other individuals with excess available time, whereas
the task orderers are parents with young children or homeowners. TaskRunner has
created a platform through which the orderer and runner reach an agreement on the
price and task. The payment is deposited by the orderer to TaskRunner and is paid out
when both parties have fulfilled their obligations. TaskRunner charges a commission
of 15 percent and does not have any corporate tax (F-Skatt in Swedish) obligations.
TaskRunner is comparable to the US site TaskRabbit, which currently has approxima-
tely 30,000 “rabbits”.
Urbit, a shared delivery service, charges a fixed price of SEK 129 per hour for delivery
services in Stockholm and is just commencing operations. The “Urber” gets SEK 80 per
hour and Urbit charges 5-15 percent of the basket value. Similar to TaskRunner, most
Urbers are students, and 250 Urbers have already been certified. The firm has raised
SEK 30 million in venture capital. A similar site is Hinnerdu.se, which was launched in
2010 and has three employees and a sister organization in Denmark.
In addition to exchanging houses and performing short-term tasks, new work-
to-pay solutions are being developed whereby people work while staying at others’
houses and therefore stay for free. One of these is wwoof.org, which is for farmers,
and there are several people in Sweden offering their farms. In general, guests work
for approximately six hours each day for six days a week and in return receive free
meals and accommodations.42
Swedish eWork has approximately 4,700 professional freelance consultants in its
network and is the largest such network in Sweden. These consultants work on pro-
jects for firms of all sizes. In the first quarter of 2015, sales increased by 32 percent to
SEK 1.5 billion, with rolling one-year sales of SEK 5 billion.43
Individuals are responsible
for handling their own taxes and administrative activities.
Freelance Finans started in 1999 and provides invoice and administrative services
to individuals who are self-employed but who do not yet have their own firms. The
organization has 11,000 members, many of whom work in journalism, graphic design,
or film.44
The CEO of Freelance Finans is also the chairman of the Freelance trade union.
42. Upplev utan pengar , TIDNINGEN ÅNGERMANLAND 2014-12-23
43. http://mb.cision.com/Main/302/9760499/370125.pdf
44. https://www.frilansfinans.se/about

Vint was founded in 2013 in Stockholm and is a niche platform that matches professio-
nal instructors and local athletes with individuals looking for personal trainers. In 2014,
Vint raised USD 1.8 million in seed funding and opened operations in San Francisco. In
August 2014, the firm employed eight people in Stockholm and four in San Francisco.45
45. http://techcrunch.com/2014/08/13/vint-sf/

Chapter 5
REGULATORY
CONSIDERATIONS
The Sharing Economy has already been confronted by a number of regulatory issues,
from legal challenges, such as the challenge to Uber’s definition of “independent cont-
ractor”, to regulatory requirements, such as the insurance and risk requirements rele-
vant to Airbnb. Many areas of potential conflict are highlighted in the book Practicing
Law in the Sharing Economy, by US attorney Janelle Orsi.46
The areas highlighted by
Orsi concern legal standards in general but are particularly relevant in the context of
the litigious and accusatorial legal system of the United States. Nonetheless, Orsi pro-
vides interesting insight into the legal and regulatory impacts of the Sharing Economy.
Below, we discuss several of the particularly relevant—but still unresolved—regulatory
issues relevant to the Sharing Economy
Employment Regulation
Although numerous labor regulations exist to protect the rights of workers vis-a-vis
their full-time employers, such regulations are often silent about the rights of freelan-
cers. Thus, a digital platform does not guarantee an individual’s well-being in the same
way that a “traditional” employer does, and individuals who provide their services
through Sharing Economy transactions generally must bear a considerable amount
of risk. For example, platforms such as Uber and Airbnb do not define themselves as
employers in the transportation and hotel sectors, respectively. Rather, they argue that
they are merely digital platforms that match drivers with clients and property owners
with tourists. Hence, these companies are not responsible for the social benefits and
insurance of the drivers and property owners. The shift to a more individualized labor
46. Orsi, Janelle (2014). Practicing Law in the Sharing Economy: Helping People Build Cooperatives, Social
Enterprise, and Local Sustainable Economies (Kindle Locations 628-645). American Bar Association. Kindle
Edition.

CHAPTER 5 REGULATORY CONSIDERATIONS
market with a larger share of self-employed individuals of various skill levels requires
a reformed labor market policy.
Furthermore, individuals in the Sharing Economy often have no control over when
and from whom they receive work assignments. In addition, as the number of labor
platforms used by freelancers increases, freelancers may be affiliated with more than
one platform, further complicating the situation. For example, taxi drivers might
simultaneously participate in Uber and other platforms and/or might have traditional
full-time employment but participate in Uber when they have free time.
Because freelancers such as Uber’s drivers are not legally employees, they do not have
the right to organize to obtain the collective bargaining privileges and protections that
most labor unions have. Thus, although some people argue that the Sharing Economy
offers flexibility and supplemental income not available from traditional jobs, others
argue that it signals a return to the piecemeal labor system that exploited workers.
Moving forward, traditional unions will not capture the entire labor force. Thus,
labor market regulations must be adapted not only to ensure the traditional safety
net for individuals but also to provide regulatory and tax incentives to incentivize self-
employment. In the US, one such organization, the Freelancers Union, has emerged
to serve the needs of this labor force. However, as explained above, the line between
employee and freelancer is not always clear, and the Sharing Economy is increasingly
generating more nuanced situations. For example, what happens if individuals barter
or are paid in kind,rather than in money? Can residents of a community volunteer for a
housing association in exchange for reduced rent? If so, what do they need to declare
for tax purposes, given that they may not be employed by the association? For that
matter, are they employed by the association?
The ability of lawyers to advise Sharing Economy clients on how to structure their
relationships and how to manage work assignments and compensation requires not
only additional legal precedent but also clarification regarding the applicability of
specific regulations to the various areas of cooperation.
Regulation of Production and Commerce
Because digitalization increases access to a variety of mass market and tailored goods
and services at competitive prices, consumers tend to benefit from digitalization.
However, as is the case for e-commerce, there are risks that must be addressed and
new areas requiring regulation.
Taxation. Taxation remains a significant and unresolved issue. Who is responsible
for reporting the sale and paying the sales or income tax? Furthermore, what about
exchanges in which money does not change hands, e.g., a farming cooperative where
individuals receive produce from the farm in exchange for labor or an Uber-like
exchange where the number of hours spent driving others can be exchanged for rides
from other participants? Similarly, when new currencies are created, should they be

treated as goods, services, or currencies for the purposes of VAT? Such debates have
already begun to emerge with regard to Bitcoin, a cryptocurrency.47
Safety. Some risks in the Sharing Economy relate to the fact that although an indi-
vidual transacts directly peer-to-peer, he or she does not personally know the person
on the other side of the transaction. For example, an individual who rents a room in an
apartment is not guaranteed the regular safety standards of a traditional hotel room.
Several platforms have developed screening mechanisms to help determine whether
a person is trustworthy. Additionally, the consumer is in some sense protected by
the “crowd” because users perform collective screening and third-party verification
through, for example, comments (as in crowdfunding) and reviews (as on Airbnb or
tripadvisor). Low ratings from the crowd will self-regulate the market.
However, in regard to the sharing of durable goods, such as homes and cars,
regulators have pushed back on several issues, typically in response to protests and
lobbying. First, there is the issue of safety. Most countries have regulations to ensure
that goods and services sold to the public meet some minimum level of safety. For
example, hotels are legally required to have emergency exits and fire extinguishers,
whereas private homes are not. Similarly, to drive a public taxi, a driver must often
have a specialized or supplementary driver’s license that requires passage of some
sort of screening test. However, what if a driver is given the wrong information about
driving conditions, what if a very large amount of money is at stake or if a fire alarm is
not installed in an apartment on the Airbnb platform?
The regulations discussed above are by no means the only regulations that may
come into play in the Sharing Economy. Regulations identified by Orsi as potentially
applicable to the Sharing Economy include those relating to health and safety; food
and agriculture; the licensing of childcare centers; public utilities; taxi services; and
the hotel industry. However, such regulations typically apply only to purely commer-
cial undertakings. Thus, there is some question whether these regulations also apply
to non-commercial undertakings, cooperatives and reciprocal agreements. As Orsi
observes, “The Sharing Economy is built on a very different set of relationships, which
makes it tricky to determine which regulations may or may not apply.” The regulatory
framework must be adapted in a manner that permits the appropriate application
of regulations in the Sharing Economy, and policy makers involved in the effort to
harmonize regulations for the digital and traditional economies should focus not on
the technology used but on the activity conducted.
IoT and Privacy. Looking ahead, both technology evangelists and consumer goods
manufacturers have hailed the rise of the “Internet of Things” (IoT), wherein everyday
devices contain tiny computers and are Internet-enabled, as a boon for the Sharing
Economy. Things can be programmed not only to alert the user to certain events but
also to communicate with each other and even to coordinate and make payments
directly among themselves without human involvement.
47. http://www.coindesk.com/europe-inches-towards-decision-bitcoin-vat/

CHAPTER 5 REGULATORY CONSIDERATIONS
The name “Internet of Things” is somewhat inaccurate; a more accurate label might
be “The Internet of Small Computers on Things”, which is another way of saying that
the things themselves cannot be endowed with the capacity to connect to the Internet.
Rather, manufacturers have started to install small computer processers on devices
and these computers both connect to the Internet and control the device. This idea is
not new, but advances in both computer hardware and Internet connectivity over the
last decade, including increasingly smaller computer parts and an increasing number of
processes being hosted in the cloud, have made it a realistic possibility (Fleisch 2010).
Indeed, although the sharing phenomena that exist today rely on human-controlled
mediators to control them as well as on human reviewers and screening procedures,
a Sharing Economy built on IoT principles is unlikely to be subject to such restrictions.
Rather, a pool of IoT resources may be self-run and self-guiding. Consequently, nume-
rous regulatory issues are presented; for example, who is to blame if a self-run, self-
shared car is in an accident? Other issues, such as cyber security and data integrity, will
also come to the fore and demand regulation.
Managing Intellectual Property and Ownership. A Sharing Economy is likely to include
not only the sharing of goods and services but also the exchange of information. Such
exchanges of information may also encompass collaboration and the creation of new
ventures. Such collaboration, while not new, is likely to create new constellations and
concerns regarding intellectual property. For instance, increased sharing in the creative
and software industries led to the development of new licenses that established the
terms of this sharing and collaboration. Ranging from the Creative Commons License to
the GNU General Public License (GNU GPL), such licenses include standard terms relating
to the sharing, re-use, private use and commercial use, among other issues. As sharing
increases, the use of standardized licenses is likely to become more common.
With regard to ownership, according to Orsi, “In a world where enterprises and
housing will ideally be financed and owned by members of our local communities,
securities law compliance will keep Sharing Economy lawyers busy.” This statement is
equally applicable to Sweden. Indeed, questions regarding securities regulations have
already arisen in the context of crowdfunding.
Managing Risk. Orsi notes that the fear of liability and loss constrains both commercial
and cooperative relationships. In the Sharing Economy, where the responsibility for risk
and risk pooling shifts away from firms with established risk practices and skills and onto
consumers who lack such practices and skills, what might happen? One immediate effect
will be a shift in the relationship between individual consumers and established firms
and institutions, including lawmakers. Indeed, consumer protection laws, which were
designed to protect consumers at the expense of firms, cease to apply in the Sharing
Economy. How should these risks be addressed as power shifts away from centralized
institutions and toward broadly distributed networks of individuals and communities?
Whereas risk sharing has traditionally been enshrined in contracts, the increasing pre-
valence of sharing—of both goods and risk—is likely to lead to an increasing number of
liability disputes. Addressing such disputes, and their increasing prevalence, is likely to
necessitate both new expertise and increased capacity in the legal area.

Chapter 6
MIXED ECONOMIC
IMPLICATIONS
Having reviewed the legal considerations implicit in the Sharing Economy, there are a
significant number of economic implications as well.
New Pricing Mechanisms Push Inflation Downward
Current trends continue to push inflation downward. Also, due to the Sharing Economy
and digitalization, newly emergent pricing mechanisms are appearing and some of
them are not captured in the traditional macroeconomic models that are based on
historical data. Also, the official statistics might not capture these new price mecha-
nisms. Digital platforms and other technological advances are decreasing entry bar-
riers and contributing to transparency, resulting in increased price competition. New
entrants, so-called born globals and micromultinationals, are accessing the global
market right from their inception, which means that previously protected local pro-
viders now find themselves facing global competition. Traditional middlemen, which
generate higher transaction costs and higher fixed costs of holding capital or labor, are
being replaced by digital platforms. These enable more perfect matching of supply and
demand as well as lower transaction costs. Since the digital platforms in the Sharing
Economy have no fixed costs related to owning, they are able to offer a lower price.
Thus, although demand is growing in the Swedish economy, companies are finding it
difficult to increase their margins.
Moreover, the CPI basket in the official statistics might be weighted incorrectly.
According to estimates by Swedbank, 30 percent of the Swedish CPI basket is directly
or indirectly affected by digitalization. Yet, the degree to which consumption of digital
goods is fully captured in the official statistics is debatable. For example, there is a
supply shock of software due to almost zero marginal costs (the costs of copying, dist-
ributing and transporting digital services are close to zero), examples of which include

CHAPTER 6 MIXED ECONOMIC IMPLICATIONS
Massive Online Open Courses (MOOCs) and streamed music and videos (Figure 7). In
addition, there are numerous free services such as Skype and Dropbox.
Productivity could be underestimated since all the free digital goods are not fully
captured in the statistics as consumption. Furthermore, there are numerous apps that
save people time and money in their everyday lives. For example, Waze, a community-
based traffic and navigation app, enables drivers to share real-time traffic and road
information, which saves everyone time and gas money on their daily commute and
travel. As a result, there is a “hidden” unit consumption of free digital goods while
the marginal costs of digital goods are falling. Because GDP measures the value of
transactions, free digital services create a consumer surplus that is difficult to capture
and inflation might be overestimated to some extent.
Many of the services in the Sharing Economy is optimizing the use of our time
making our lifes more productive. Yet, time optimization has never been included in
GDP which could lead to an underestimation of productivity. The measurement error
is larger now than it has been previously due to the digital platforms. In summary,
digital services create time optimization that is not translated into productivity and
decrease marginal and transaction costs. The net effect is a consumer surplus and a
time optimization that are not captured in the official statistics.
FIGURE 7. Income in the Swedish music industry by format
Source: IFPI, musikförsäljningsstatistik
As discussed above, productivity from the Sharing Economy is not fully captured in
official statistics thus any amount of change in productivity due to the Sharing Economy
is difficult to measure. However, a significant underestimation of productivity could
be significant, and this underestimation could be an additional factor contributing to
downward price pressure.
0%
20%
40%
60%
80%
100%
2009 2010 2011 2012 2013
Physical records Streaming Other digital
Price decline of 33% on music consumption since 2006

Finally, there are considerable downward pressures on wages, e.g., transparency,
increasing competition. In addition, taking a more general perspective of digitalization,
software applications are replacing routine tasks and robots replacing manual labor in
manufacturing processes. These forces are causing a middle-tier job squeeze and for-
cing middle-skilled labor to compete for jobs in the lesser-skilled sector, which has the
effect of reducing wages. Such structural factors are holding back wage increases even
in the current environment with a cyclical upswing in the US labor market. In Sweden,
lower labor mobility and lower wage flexibility cause more wage rigidity compared to
the US. Nevertheless, the underlying forces lead to the same wage pressures.
At the same time, there is a divergent price trend. It could be argued that everyth-
ing that can be digitalized will be, and that prices for these goods will be reduced; The
Sharing Economy is making customized services and experiences available to individuals
for lower prices. Looking forward, this increased supply of mass customized goods is
likely to decrease the price of such goods - and consequently the cost of living. However,
at the same time, everything that cannot be digitalized will increase in value.
Although some of the above-referenced pricing mechanisms have been occurring for
decades, we are now entering the second phase of the exponential development curve,
and it is possible that prices will be affected to a much greater degree than they have
been previously. In the same vein, the cost of insurance and regulatory compliance may
ultimately drive prices in the Sharing Economy upwards, should regulators choose to
regulate this emegent business model further. At the same time, margins may rise as a
result of new regulations or because companies find new ways to earn profits; thus, at
present, the precise impact of these new price dynamics on inflation is unclear.
We beleive the net effect considering both the supply shock of goods and services and
increasing regulation will have a net downward effect on prices.
Lower Demand for Capital in the “Zero Marginal Cost
Society”?
How is the Sharing Economy affecting demand for capital and investments? What
will the new long-term interest rate be? Are the new digital assets appropriately
priced and risk-weighted? These questions are difficult to answer given the new
price mechanisms and business models in the Sharing Economy. Below, we try to
provide some guidance to help to answer these questions and urge more academic
research in this field.
The reduction of slack in the economy, through the use of resources that previously
sat idle, creates more and smaller transactions while adding value to one part of the
economy. However, because of the way resources are exchanged, e.g., as free digital
services or exchanged goods, these transactions are not fully captured in the official
statistics, as explained above. Indeed, we may even find that GDP is reduced as slack is

reduced and more economic activity migrates from traditional middlemen to Sharing
Economy digital platforms.48
The spread of digital services and the decrease of marginal costs to close to zero are
changing the characteristics of economic and business models. There are indications
we are entering an era characterized by abundance rather than scarcity.49
Most firms
in the Sharing Economy try to achieve market dominance, obtain a monopoly, and
impose prices that are higher than marginal costs. However, if consumers pay only the
marginal costs and marginal costs are falling to zero, then businesses cannot ensure a
return on their investments. How will lower profit levels satisfy shareholders?
According to Jeremy Rifkin, new types of incentives are emerging that are based less
on financial reward (in a traditional sense) and more on a desire to build social capital
or to advance the social well-being. Rifkin argues that a hybrid economy is developing,
in which these new incentives will complement goods and services with more traditio-
nal and higher marginal costs that can be exchanged on traditional markets and yield
sufficient profits to insure a return on investment. For firms that embrace the Sharing
Economy, where the prices of goods and services are reduced or even free, what type
of value can be acquired and how can this value be capitalized? Consumers in the
Sharing Economy are aggregating a new form of capital, social capital,50
which refers
to time optimization, social well-being, meeting more individualized demand, etc.,
and as noted above, this form of value is not captured in the official statistics. Will
the growth of the Sharing Economy eventually cause social capital and digital assets
to play a more crucial role than traditional financial assets?
The challenge for traditional financial institutions today is that they might reject
or miss opportunities for investment due to the difficulty of assessing the risks of
digital assets and social capital. Entry barriers to digital innovations are low, and
most of the “capital” or “value” is invested in intangible assets, not in traditional
tangible goods or assets, which parallels the economy in general, insofar as both are
increasingly driven by the knowledge-intense service sector. Thus, new models to
evaluate risk in both ideas and creativity are needed in the Sharing Economy.
Furthermore, the Sharing Economy has disrupted mature industries, such as
the hotel and taxi industries, by providing consumers with cost-efficient access to
resources without ownership. Production in these sectors as well as volume and
revenue might fall in the future as consumption shifts from traditional middlemen
to Sharing Economy digital platforms and as borrowing or renting replaces owning.
The demand for investments in, for example, taxi vehicles, hotel buildings, and
physical retail stores, could fall and would lower returns on investment and capital
for the economy as a whole. As a result, credit spreads may widen due to the
decreased ability of firms to repay future debt, which will be penalized by the
48. Rifkin, J. (2014). The Zero Marginal Cost Society: The Internet Of Things, The Collaborative Commons, and
The Eclipse Of Capitalism. Macmillan.
49. Rifkin (supra)
50. Rifkin (supra)

stock market. In contrast, sectors that are less capital intensive in the Sharing
Economy might experience positive stock market growth. Because these firms
demand relatively little or no capital from capital markets, the effects on the
credit spreads of these firms may be limited, whereas they may reap increasing
returns on their social capital.
Competition
Although there are significant opportunities for economic growth, incumbent firms
may feel threatened by the new competition and the possibility of shrinking profit
margins. Incumbents in industries such as the transportation industry are already
spending vast resources to hire lawyers, lobby for legislation to block the new competi-
tion, promote negative publicity around the competition, and market their traditional
services. This was the case for Uber, which has been banned in countries including
Brazil, France, Germany, the Netherlands, Portugal, and Spain.
Other firms indicate that they see no point in fighting this trend. Instead, they are
exploring ways in which they may participate in the Sharing Economy, such as through
sponsoring partnerships, acquiring firms, integrating the Sharing Economy into their
existing business models, building their own platforms, and innovating their services.51
For example, incumbent taxi firms in San Francisco reacted to Uber by co-developing
Flywheel, an Uber-like app, and the leading taxi firms in Stockholm have developed
several different payment solution apps. Similarly, DHL created its own MyWays app
to facilitate peer-to-peer deliveries.
There is a certain assumption that digitalization is ‘superstar biased’ and that this
assumption holds for the Sharing Economy as well.52
The superstar bias suggests that
there is a ‘winner takes all’ effect because the marginal utility derived by consumers
from using a certain digital technology increases with the number of other consumers
who use the same technology, which leads to the rapid standardization of technology
and monopolization of sub-markets. What we are beginning to see is “perfect competi-
tion” on digital platforms but a monopoly situation between platforms. This monopo-
listic situation is obvious from a consumer’s perspective. If there are a vast number of
nearly free digital platforms, why take the second-best option? As a result, similar to the
dotcom boom of the late 1990s, many startups are rapidly expanding their operations
into numerous countries based on the assumption that there is a first mover advantage.
Labor Productivity and a Labor Market under Transition
The Sharing Economy is having a significant impact on the labor market, and the effects
on existing workers and on the line between employees and freelancers have been
the subject of discussions in many countries. On the one hand, the Sharing Economy
51. http://www.web-strategist.com/blog/
52. Rosen, S. (1981). The economics of superstars. The American Economic Review, 845-858.

enables a freelance economy in which there is increasing global labor mobility, e.g.,
in the tech industry, and an increasing number of new work opportunities across the
globe for people who prefer to be self-employed. On the other hand some Sharing
Economy services are, by their nature, local. The Sharing Economy may therefore also
introduce constraints on the labor supply in urban areas. Digital platforms have led to
the unbundling of traditional jobs, thereby providing alternatives to traditional jobs and
promising new job creation, especially for unemployed and lesser-skilled individuals.
Labor activity in the Sharing Economy is by its nature both local and global. Some
services can be provided by workers far away while others are, by their nature, local.
The Sharing Economy may therefore also introduce constraints on the labor supply in
urban areas as demand increases for locally provided services. The development of
the Sharing Economy therefore calls for a critical mass of service providers, meaning
that dense, urban areas are prime locations for the Sharing Economy to thrive.
Thus, although there is no denying that the Sharing Economy creates efficiencies
and improved productivity, this only benefits certain workers. Indeed, it allows the
high-powered executive to outsource tasks such as collecting the laundry and emptying
the garage, allowing her to be more productive at her job. However, the people per-
forming these tasks may have little opportunity to develop beyond the performance
of a single menial task. Furthermore, rather than specializing in a particular service,
the individuals selling their time (or tasks) do not necessarily have the opportunity
to specialize because all administrative duties, including the calculation of VAT and
income taxes, fall on them. This undermines decades of productivity gains wherein
people specialized in certain tasks within a firm, which improved productivity as a
whole. Increases in productivity are therefore unequal; some individuals experience
increased productivity whereas others do not. This possibility raises the question
whether the phenomenon is, productivity-wise, generally beneficial for society.
Some academics argue that the productivity gains achieved through ground-breaking
advances in IT have diminished and we are entering an era of slow productivity growth
and stagnation. One possible reason for this scenario is that because digitalization is
skills biased, i.e., it complements highly skilled workers to a larger extent than lesser-
skilled workers, there is a relatively larger lag.
In the future, as digitalization is embraced by nearly all sectors of the economy
and IT becomes increasingly mobile, we could experience a new era of potential
productivity gains. IT has been characterized as a General Purpose Technology and
constituted a breakthrough that led to a productivity up-shift. Mobile IT has the
potential to become the new General Purpose Technology. However, commentators
and academics are concerned about the fast pace of digitalization and automation
and their potential impact on the labor market, especially because wages in the
Swedish manufacturing industry are relatively high. Recent studies predict that 36-60
percent of the current jobs in Sweden, primarily routine jobs, will be lost during the

next 20 years due to digitalization and robotization.53
However, although 10 percent
of Swedish jobs disappeared between 2006 and 2011 due to automation, the employ-
ment rate has remained relatively unchanged. The reason for the stable employment
rate is threefold: 1) digitalization and increased revenues have increased the demand
for labor, such as computer specialists and engineers, 2) higher disposable incomes of
highly skilled individuals have increased the demand for local service sector jobs, and
3) labor market reforms, particularly those targeted toward youth labor, have had a
positive impact on employment.
Thus, as in previous technological paradigm shifts, it is predicted that there will
be technological unemployment as technological advances outpace the rate at which
we can find new uses for the displaced labor. Although this prediction implies certain
negative effects in the short run, the long-run effect should be positive because history
shows that people tend to move higher up in the value chain as lost jobs are replaced
by new jobs over time. Indeed, the Sharing Economy may provide a short-term cushion
for those who lose their jobs as a result of digitalization. As Arun Sundarajan, Professor
of Information, Operations and Management Sciences at the Stern School of Business,
New York University recently observed: ”The Sharing Economy will expand the job
market faster than than the job loss due to robotization - in the near term”.
To a certain extent, the above-described net effect on jobs will depend on the ena-
bling power of the Sharing Economy, which is beginning to embrace sectors beyond
those already affected. Although the Sharing Economy seems relatively innovation
friendly, based on its low entry barriers, the crowd’s real-time self-regulatory and
sharing characteristics, and less capital-intensive services, the question is the degree
to which entrepreneurs and freelancers will be able to create opportunities and jobs in
both highly skilled and lesser-skilled sectors. It is difficult to foresee what types of jobs
the future will bring. The tasks that cannot be digitalized will in certain cases increase
in value, such as the value of the physical meeting, and thus create job opportunities
in sectors that will not require technology.
Leading to Increased Inequality?
One of the biggest concerns regarding the Sharing Economy elsewhere in the world is
based on the fact that it does not necessarily create new, stable jobs. On the contrary,
it creates a market for short-term employment, which potentially undermines decades
of productivity gains through specialization, and often pays lower-than-market wages.
A prolonged period of expansionary monetary policy and technological change has
already created polarized labor markets and, as a result, higher income inequality,
and it is possible that a greater share of the productivity gains derived from digitaliza-
tion will be allocated to highly-skilled workers than to lower-skilled workers, thereby
53. Fölster, Stefan. (2014) De nya jobben i automatiseringens tidevarv. Stiftelsen för Strategisk Forskning,
Stockholm.

further exacerbating this inequality.54
It should be noted that the effects of techno-
logical change on labor markets constitute a historical trend that commenced with
the Industrial Revolution, and the current effects of technological change predate the
financial crisis, with wage growth beginning to decouple from productivity growth
more than 10 years ago.55
Recent academic publications (see, for example, OECD 201456
) argue that inequality
hampers growth, which counters the traditional argument that a certain level of inequality
provides incentives for innovation and entrepreneurship and is therefore important for
growth. Rather, an effectively implemented redistribution policy as well as appropriate
social policies (such as access to free high-quality education) have been shown to have
a positive effect on growth, thereby avoiding a trade-off effect between growth and
inequality.57
Moreover, although these changes have exerted and continue to exert pressure on
prices and wages, it is not clear that this effect will persist indefinitely. For instance,
new regulations and firms may lead to the discovery of new ways to earn profits. In
addition, previous waves of industrialization have ultimately created new, unforeseen
jobs; such job creation may yet occur during this wave of analogous structural change.
54. Brynjolfsson, E., & McAfee, A. (2014). The Second Machine Age: Work, Progress, and Prosperity in a Time of
Brilliant Technologies. WW Norton & Company.
55. Felländer & Breman (supra)
56. http://www.oecd.org/els/soc/Focus-Inequality-and-Growth-2014.pdf
57. Raul, R. & Vicente, R., “Inequality in European regions” In Wennberg & Ehrling (Eds) Inclusive Growth in
Europe (2014), available at: http://www.liberalforum.eu/en/publications.html?file=tl_files%2Fuserdata%2F
downloads%2Fpublications%2F2014%2FInclusiveGrowth.pdf

Chapter 7
SWEDEN AHEAD, BUT
CHALLENGES REMAIN
Characteristics of the Swedish economy suggest that it is in a good position to benefit
from the Sharing Economy. These characteristics include high levels of employment,
relative specialization in IT and communications services, high levels of Internet and
smartphone penetration, well-recognized entrepreneurial hubs, and the ideological
concern of Swedes for sustainability58
, which in many ways is the backbone of the
Sharing Economy movement. Because the Sharing Economy is likely to continue to
grow in Sweden, the labor market, prices, productivity, and the demand for capital will
be affected. However, well-established behaviors do not change quickly, and thus we
will probably see a hybrid economy59
—one that is characterized by both sharing and
owning—for some years to come.
At the same time, like most countries, Sweden is likely to feel the adverse effects
of increased digitalization and robotization. This is partly because its largest sec-
tors of employment are transportation, construction, and metal manufacturing.
All three sectors are significant employers across Europe, and employment in
these sectors is roughly the same in Sweden, relative to its population, as it is
elsewhere in Europe.
Sweden has enormous potential with respect to embracing the Sharing Economy.
One reason for this potential is that Sweden experienced the IT boom and crash of the
late 1990s and thus has learned many lessons regarding the governance of financial
markets, investment in digital infrastructure and training, and the accumulation of
a critical mass of serial entrepreneurs with experience in building digital ventures.60
With the right training and circumstances, jobs that are lost due to digitalization and
58. Berkes, F., Folke, C., & Colding, J. (Eds.). (2000). Linking Social and Ecological Systems: Management
Practices and Social Mechanisms for Building Resilience. Cambridge University Press.
59. Rifkin (supra)
60. Wennberg, K. (2011). Entrepreneurial Exit. Available at SSRN 1825113.

CHAPTER 7 SWEDEN AHEAD, BUT CHALLENGES REMAIN
robotization can to some extent be replaced by self-employed individuals or fre-
elancers in the Sharing Economy. The Swedish welfare state gives the country some
advantages in this regard: the state not only provides a safety net for entrepreneurs
and freelancers, but the education needed to re-train people is free at the point of
use for Swedes. In contrast, other places, like the US, rely on private firms and other
middlemen to provide private insurance and paid-for higher education.
Falling or continued low prices will increase purchasing power. Nonetheless, the
Sharing Economy is developing at a rapid pace, and the regulatory framework must
appropriately address the protection of consumers and employees while simulta-
neously enabling the creation of new jobs. These tasks will require a balancing act.
In Sweden’s modern welfare state, the labor unions have played a significant role in
shaping the labor market and ensuring the protection of workers. Fahlbeck61
writes
that Swedish unions have worked hard in the international arena to “broaden the aim
of the European Union to embrace labor market and social issues”. The Swedish labor
market model is based on risk sharing, with a safety net for the individual, but has its
roots in traditional manufacturing industries.
The Swedish welfare state is also premised on the idea that individuals are “employed”
in the sense that they work for a larger firm; self-employment is the exception rather
than the norm. One possibility is that self-employment will become the new norm
and, if so, different rules will be required to ensure both that self-employment runs
smoothly and that individuals keep enough of their earnings to live on rather than
opting out of self-employment.
Sweden boasts a strong skill base and traditionally has a high share of graduates
in natural sciences and engineering, which bodes well for innovation in general but
may not impact the growth of the Sharing Economy. However, there are increasing
concerns about the quality of Swedish education and its ability to produce a workforce
with the skills that will meet the needs of the Swedish economy in the years to come.
In science education, Swedish students rank in the middle of the OECD states, and
the pay-offs of higher education in Sweden lag behind many of its peer countries.62
Further, Sweden does not rank high in the attraction of foreign skill, which Christian
Ketels63
argues is increasingly necessary in the global economy. Further, Sweden’s
government regulation and administrative practices are considered bureaucratic, and
Sweden has one of the highest levels of taxation in the world, especially for individuals.
Some Possibilities: Scenarios for 2020
A tool commonly used by organizations and individuals to prepare for the future is
scenario analysis. In brief, scenario analysis enables individuals to envision multiple
possible future scenarios, which is especially helpful in situations characterized by high
61. Fahlbeck, R. (1999). Trade Unions in Sweden. Discussion Paper, Labour and Society Programme,
International Institute for Labour Studies (Geneva, ILO).
62. Ketels, C. 2009. Clusters, cluster policy, and Swedish competitiveness in the global economy. Globalisation Council.
63. Ketels (supra)

levels of uncertainty and change.64
One method of conducting scenario analysis is to
create a 2x2 matrix with each of the two axes based on critical uncertainties, i.e., the
driving forces that will have the most impact on how the future unfolds. The 2x2 matrix
enables the creation of four plausible but distinct scenarios of the future and thereby
encourages the consideration of both the threats and opportunities presented by
each scenario. Note that there is no one right or wrong scenario; rather, the realized
future tends to possess components of each scenario. Although we do not have the
space to conduct a complete scenario analysis here, it is interesting to apply the tool
in the context of this report to better understand what implications these different
scenarios have for the development of the Sharing Economy in Sweden, particularly in
the context of the regulatory environment.
FIGURE 8. Scenarios for 2020
We have selected the following two axes of uncertainty for our matrix: 1) digitalization
and technological advancements (e.g., IoT, artificial intelligence, robotics, 3D printing,
energy), ranging from High Pace of Technological Development and Adoption to
Low Pace of Technological Development and Adoption, and 2) the global economy,
ranging from Global Economic Boom to Global Economic Recession. Although there is
always some debate about which axes of uncertainty should be selected to build the
matrix, the two axes selected here both have considerable implications for the Sharing
Economy. The first axis relates both to the pace at which technological development
occurs across a number of areas and to the rate at which it is absorbed into society and
the economy. The second axis represents the level of growth of the global economy.
64. A Note on Scenario Planning, Harvard Business School, 2005.
”Freelance
Economy”
”Shadow
Economy”
”Internet of
Space”
”Business
as usual”
Global
Economic
Recession
Global
Economic
Growth
High Pace of Technological
Development and Adaption
Low Pace of Technological
Development and Adaption

We have labeled each of the four scenarios and discuss each scenario and its impli-
cations for the Sharing Economy below, beginning with the lower right quadrant and
moving clockwise (Figure 8). Finally, we have chosen to look five years into the future—
i.e., at 2020—as this should provide a sufficient amount of time for both technology
and the economy to go either way, and we use this opportunity to break somewhat
free of our current views of the world.
Scenario: Business as Usual
Predictions about the future, including the pervasiveness of IoT, a 3D printer in every
home, and the replacement of a high percentage of jobs with robotics, are far from
fulfilled in this scenario, and both work and home life in 2020 have remained more or
less the same. However, the global economy has picked up considerably since 2015;
most nations across Europe and the globe are experiencing expansionary phases,
and business and consumer confidence are at levels not seen in years. As a result,
employment across all sectors of the economy is experiencing steady increases, and
established firms in the construction, manufacturing, transportation, and pulp and
paper industries are continuing to hire employees. The freelancing economy continues
to grow at a steady pace, primarily in the areas of IT consulting and other specialized
consulting areas, such as advertising and PR. Within the banking industry, crowdfun-
ding and P2P lending are steadily gaining ground.
Platforms such as TaskRunner cater primarily to students who are looking for small
jobs to help them pay for their everyday expenses. However, a number of new Sharing
Economy platforms and services have emerged in response to a growing number of
individuals who are looking for ways to make their everyday life much more conve-
nient and have a disposable income to spend on these services. These neo-sharers
are focused on sustainability and therefore use new services that focus on sharing
new durable goods, such as energy-efficient cars and electric bikes. There is a high
degree of differentiation among Sharing Economy platforms, with a broad array of
both local and global platforms because people are interested in developing their
own independent, individualized lifestyle, which enables these platforms to charge
reasonable margins.
Despite these advances, consumerism and the labor force remain largely unchanged,
leading many people to question why there was so much hype around the Sharing
Economy in 2015.
Scenario: Shadow Economy
Similar to the Business as Usual scenario, predictions about the future, including the
pervasiveness of IoT, a 3D printer in every home, and the replacement of a high percen-
tage of jobs with robotics, are far from fulfilled. However, the Global Economy has hit
a rock-bottom low in terms of recession. As a result, many people working in Sweden’s
established manufacturing and other industries have lost their jobs. Consumption has
fallen dramatically as disposable income has all but dried up. Contrary to the Business
as Usual scenario, the Sharing Economy is in full force. However, it has merely driven

the creation of a Shadow Economy characterized by micro-entrepreneurs and the
re-sharing of used goods. There has been a rapid rise of “low-skilled” micro-entrepre-
neurs who are willing to take on any number of menial jobs and small tasks to make
ends meet.
This rise has been substantially encouraged by a number of TaskRabbit-like platforms
that have emerged with the aim of making money by attracting micro-entrepreneurs
to join their respective platforms. However, due to an oversupply of people searching
for these types of jobs, it is difficult for individuals to differentiate themselves.
Furthermore, because the ability to make one’s living from these tasks depends on
a dense population, there is growing pressure on urban areas as runners move to
cities, which further exacerbates the situation. Platforms are taking advantage of this
oversupply, and due to competition both among the platforms and among the runners,
wages and conditions have quickly deteriorated into a downward spiral. As a result,
there is a continuous flow of class action lawsuits by runners against the platforms.
Beyond the labor platforms, local Sharing Economy platforms are attempting to
enter a number of areas. However, international sharing platforms continue to gain
monopoly positions in a growing number of industries in Sweden due to these plat-
forms’ ability to achieve productivity gains on a global scale through big data ana-
lytics, thereby driving out local startups. Because there is little competition among
the monopoly platforms but significant competition within them, there are increasing
transaction fees and increasingly poor conditions for both suppliers and consumers.
In response, a number of local not-for-profit Sharing Economy platforms and commu-
nity sites have blossomed, allowing individuals to swap and donate their used goods
(resharing), which further drives down consumption. Individuals have also discovered
that they can trade tasks with one another on these homegrown sites without having
to go through TaskRabbit-like platforms. Due to the recession, trust in established
banks continues to decrease rapidly; at the same time, banks have severely tightened
their credit policies. Banks continue to lose market share as both local and international
crowdfunding platforms gain in popularity, with P2P lending growing far beyond
expectations.
As a result, the Shadow Economy is at an all-time high and the government is
spending vast resources on efforts to regulate and monitor these activities and is
considering a reduction of the limit for non-taxable income. The government is also
attempting to monitor the international monopoly platforms to prevent them from
abusing their market power but is having difficulty doing so because it does not
understand the various business models. One bright light in this scenario is that there
are a number of local government Sharing Economy initiatives across Sweden that are
focused on facilitating the sharing of durables, consumables and tasks to encourage
people to remain local and to allow them to save on expenses.
Scenario: Freelance Economy
The global economy is at an all-time low but the pace at which technological develop-
ments are being adopted far outpaces 2015 predictions. Households have 3D printers,

the IoT is in full force due to cheap sensors and standardization, robots and drones
abound, and the majority of homes and buildings are creating an energy surplus. These
factors have had serious implications for Sweden’s labor force, and job reductions at
Sweden’s established firms have also outpaced predictions.
However, due to the fast pace of technological development and adoption in
new technological fields, there is a high demand for various new skills to feed this
technology wave. A number of local and global Sharing Economy labor platforms have
emerged and to attract individuals, these platforms are offering free education, online
skills training, and networking activities. Fortunately, competition among the plat-
forms is not overly fierce because the platforms can differentiate themselves based
on technological area and on whether they serve local or global markets. Although
traditional sources of funding, e.g., banks, venture capitalists and soft loans, have
dried up, crowdfunding platforms are booming as entrepreneurs and small businesses
launch their new ventures on these platforms.
Furthermore, as the circular economy begins to take hold, resharing platforms for
durables and consumables are being replaced by local neo-sharing platforms as tech-
nology begins to pervade all aspects of work and home life. Households are becoming
self-sufficient, not only due to their energy surpluses but also because they are able
to print a variety of products from recycled and local materials through their local 3D
printing network. People are leaving congested urban areas due to poor quality of life
and moving to small and medium-sized towns and the countryside to take advantage
of the rise of local, self-sufficient economies with community-owned assets and of
their ability to work anywhere through the internet. Local governments are vying to
attract these urban refugees by promoting local government initiatives to facilitate
publicly accessible goods, e.g., cars, working spaces and 3D printers, and are experi-
menting with collaborative models for taxes and funding.
Scenario: Internet of Space
Who could have predicted this global economic boom and fast-paced technological
development and adoption? It seems that the two phenomena have continued to
feed each other in a continuous growth spiral. Established firms are competing for
talent and individuals are increasingly holding two jobs, both as employees and as
freelancers, which allows them to develop their hobbies and interests. There are a
number of talent platforms that enable training and networking for professionals, as
well as TaskRabbit-like platforms for students, which are increasingly popular because
of the high number of students moving to Sweden due to Sweden’s leadership posi-
tion in technology. Both local and international crowdfunding platforms are booming
because they are able to differentiate themselves and to attract both local and inter-
national entrepreneurs and investors.
Due to alternative energy sources and micro-manufacturing techniques, and because
used goods are being recycled as input for 3D printers and the quantity of imported
goods is declining, neo-sharing platforms focusing on locally made, small-scale, high-
quality “shareable” goods abound. Sweden’s advanced development in areas such as

IoT, drones, and robotics has led to the country being used as a test market by many
multinational firms interested in developing new products and services in both urban
and non-urban settings. Furthermore, Sweden has become the global leader in space
tourism due to Spaceport Sweden’s efforts, attracting significant talent and capital
from across the globe to its space tourism cluster in Norrland.
Due to Norrland’s need to develop considerable regional infrastructure—essen-
tially from scratch—and its highly educated population and advanced technologies,
Norrland is also a global leader in the development of new forms of Sharing Economy
platforms and value creation models. The Swedish government now spends a consi-
derable amount of resources on issues such as privacy and data integrity as a result of
the fast pace of technological development and adoption. In addition, the government
is focusing on the transition of traditional institutions, such as banks and universities,
into P2P platforms because demand for traditional institutions has declined conside-
rably in recent years.

Chapter 8
POLICY
CONSIDERATIONS
The above discussion highlights the risks that the Sharing Economy poses for Swedish
and other economies. Indeed, although Sweden is already a largely knowledge-driven
economy, and thus is likely to benefit more from the rise of the Sharing Economy than
other countries, we argue that much could be done to maximize the potential of the
Sharing Economy while simultaneously minimizing the possible negative effects. We
believe that the following themes are crucial areas of consideration for policy makers:
1) flexible regulation using ”trial and error”, 2) facilitation of entrepreneurship, 3) the
government’s involvement in the Sharing Economy, 4) labor market flexibility, educa-
tion and challenges for general statistics, and 5) housing and the gains from dynamic
clusters.
Flexible Regulation Using “Trial and Error”
Consumer protection should be strengthened in Sharing Economy transactions, and
insuranceforusersprovided.Inaddition,employersandemployeeseachneeda“single
voice” through which to lobby, and each group should pool their resources to facilitate
negotiations in areas such as insurance coverage. Technologies to facilitate trust and
identification should be developed and shared. Transparency is necessary for users
to provide impartial information on taxes and other regulatory filings, and unbiased
ratings should be provided. Most importantly, a flexible regulatory framework should
be established. For example, an individual renting out a single spare room should
not be subject to the same type of regulation as a firm that rents hundreds of rooms
annually. Finally, because technology is enabling the rapid spread of Sharing Economy
dynamics, the regulatory framework should be able to work in an iterative fashion.

CHAPTER 8 POLICY CONSIDERATIONS
The British government outlined a number of pro-Sharing Economy policy considera-
tions in a report released at the end of 2014.65
However, this report has been criticized
for neglecting labor issues. Although this report demonstrates that Sharing Economy
platforms enable lower prices in horizontal transactions, it is also true that the net-
work effects of engaging with a single platform may create monopolies at the platform
level. Thus, although consumers stand to benefit from the Sharing Economy, if a single
monopolist platform captures all of the activity, it may exploit the market, whether by
raising fees for its captive market or by failing to innovate. These issues require further
discussion among regulators.
Facilitation of Entrepreneurship
Previous attempts by governments to facilitate entrepreneurship include efforts to
simplify the initiation and operation of small firms. For example, sole proprietorships
(“Enskild firma”) and limited liability firms (“Aktiebolag”) are subject to simplified
accounting and tax reporting requirements. Similarly, in 2010, the upfront cash
requirements were reduced from SEK 100,000 to SEK 50,000. This simplification pro-
cess seems to have worked: the number of new limited liability firms in Sweden has
increased since 2010, and research indicates that four out of five new jobs are created
by small and medium-sized enterprises. Self-employment plays an important role in
the creation of new jobs, and the Sharing Economy might be an additional means of
promoting self-employment and new job creation.
Innovation has been widely linked to entrepreneurship. Thus, encouraging inno-
vation also facilitates the creation of new businesses, including both businesses that
create jobs and businesses that allow Sweden to compete internationally. One key area
of innovation is the creation of innovative clusters. Stockholm is home to a significant
technology cluster, which is likely to help the country become and remain competitive
in the area of digitalization. Firms and organizations in Sweden employ 592,000 indivi-
duals in high-tech areas.66
This number increased 9.5 percent between 2000 and 2011
and represents 12.7 percent of total employment in Sweden and 2.7 percent of high-
tech employment in Europe. The Stockholm region alone employs 197,000 individuals
in high-tech, which accounts for 18 percent of all individuals employed in the region
and is the highest per capita concentration in a large business center in the EU.67
Although few countries have statistics on inter-firm cooperation within regional
clusters, firms and individuals in clusters are part of the same ecosystem and their
65. Wozzkow, D. (2014). Unlocking the Sharing Economy An independent review. Available online at: https://
www.gov.uk/government/uploads/system/uploads/attachment_data/file/378291/bis-14-1227-unlocking-
the-sharing-economy-an-independent-review.pdf.
66. Defined as “the production of high-tech goods and services, or otherwise engaged in highly technical
activities in other industries. This includes all workers in the high-tech industries regardless of occupation,
as well as those employed in the STEM occupations of science, technology, engineering, and math in non-
high tech industries”.
67. http://feb.kuleuven.be/VIVES/Onderzoek/discussionpapers/DP/dp2013/final-20131223-3rd.pdf

close spatial proximity allows for frequent direct, informal, face-to-face contact
between employees, entrepreneurs and other actors, which is likely to foster tacit
knowledge sharing between individuals. The presence of a strong cluster is a source of
local competition, particularly for capital investment and demand, which encourages
entrepreneurs and other actors to improve their offerings in order to remain competi-
tive, not just in price but within regional supply networks.68
Numerous academics have noted that the fuel for innovation is unclear; instead,
they refer to “something in the air”. This “something in the air” has been linked to net-
work effects, including both strong and weak ties among individuals, which stimulates
the sharing of tacit and explicit information and knowledge.69
Therefore, keeping innovation and entrepreneurship in mind, we make the follo-
wing recommendations:
1. Channel risk capital into early stage innovation. This would include harmonizing
regulations in non-banking sectors, including crowdfunding and P2P platforms.
2. Encourage cooperation and lower entry barriers. This could be accomplished by
creating networked incubators and research centers that are closely linked to
and cooperate with established firms and venture capital
3. Teach business skills at schools, especially relating to accounting and tax
regulations.
The Government’s Involvement in the Sharing Economy
Government services could be opened up to include Sharing Economy services
alongside traditional services. Public sector services could gain from decreased costs
and from time optimization, and public finances could achieve lower costs and more
efficient use of taxpayer money. In the UK, for instance, the Croydon City Council is
supporting the car-sharing service Zipcar, thereby reducing the extent to which its
employees use their own cars.70
According to Zipcar, the Croydon City Council’s suc-
cessful initiative produced the following results:
1. A 42 percent decrease in car travel costs, from GBP 1.3 million to GBP 756,000.
2. A 52 percent reduction in the number of Croydon City Council employee car
users, from 1,284 to 611.
3. A 42 percent decrease in employee business miles.
4. A 36 percent reduction in annual employee CO2 emissions, from 324 tons to 207
tons.
68. Delgado, M., Porter, M.E., & Stern, S. (2010). Clusters and entrepreneurship, Journal of Economic
Geography, 10(4), 495-518.
69. Uzzi, B. (1999). Embeddedness in the making of financial capital: How social relations and networks benefit
firms seeking financing. American Sociological Review, 481-505.
70. http://www.zipcar.co.uk/press/releases/croydon-council-cuts-employee-car-usage-in-half-with-zipcar

Another such initiative is the Shareable Cities Resolution adopted by the US Conference
of Mayors in June 2013.71
This resolution encourages mayors to make their cities more
shareable, encourage better understanding of the Sharing Economy, and create local
task forces to review and address regulations that may hinder participation in the
Sharing Economy. Mayors also agreed to play an active role in better utilizing publicly
owned assets through proven sharing mechanisms.
Other proposed means of government involvement in the UK include opening the
government’s digital identity verification system, GOV.UK Verify, to use by private
companies.72
The Swedish equivalent of this, BankID, has already been opened for
use by private companies in Sweden (subject to approval) for some time.73
Similarly,
a UK report recommends that criminal record checks be digitized so that they can be
performed quickly by Sharing Economy firms.74
Labor Market Flexibility, Education and Challenges for
General Statistics
What is clear from the above discussion is that the Sharing Economy blurs the lines
between employment, self-employment and consumption. Although it will be difficult
to tease out these relationships, it is clear that additional skills and different types
of protections are necessary for vulnerable workers. Policy suggestions include the
following:
Facilitate a flexible labor market. The labor market may need to be more flexible,
creating incentives both for mobility and for self-employment. However, such flexi-
bility is difficult to balance with a safety net for vulnerable individuals. The Swedish
welfare model, which is characterized by risk sharing among individuals and security
for the individual, has benefited the economy, and in our view it is even more crucial
to aim for social cohesion in the future. Nevertheless, the model must be adapted to
the newly emergent labor market.
Capture the value of the Sharing Economy in general statistics and models.
Calculating the employment effect of the Sharing Economy is difficult because such
employment occurs by sharing tasks and hours, that is, by performing services that
are not registered in the official GDP. Consequently, the line between work, leisure and
social engagements is blurring. Brynjolfsson and others have previously argued that
the number of hours people spend on Facebook does not reflect the value created.
The same can be said of the Sharing Economy: value is definitely created, but it is
difficult to capture this value quantitatively. In qualitative terms, we have already seen
that the Sharing Economy affects not only the economy but also the individuals who
71. http://www.collaborativeconsumption.com/2013/06/26/shareable-cities-resolution-passed/
72. Wozzkow, D. 2014. Unlocking the Sharing Economy An independent review. Available online at: https://
www.gov.uk/government/uploads/system/uploads/attachment_data/file/378291/bis-14-1227-unlocking-
the-sharing-economy-an-independent-review.pdf
73. https://www.bankid.com/sv/Om-foretaget/Historia/
74. Wozzkow (supra)

engage in it, particularly with respect to the manner in which labor is organized. New
methods of collecting and analyzing data are needed. For further discussion on the
policy implications for Sweden’s Central Bank related to the new price mechanisms
and the underestimation of productivity, see Appendix Two.
Promote diversity among board members. There appears to be a higher propor-
tion of women involved in Sharing Economy sites than in more traditional IT startups,
but this issue must be studied more closely. Another initial observation is that many
new startups founded by Swedish men have all-male Swedish management teams and
boards of directors. As startup firms, they should be encouraged to be more diverse
in their composition.
Provide a workforce with skills that meet the needs of the Swedish economy in the
future. Moving forward, Sweden boasts a strong skill base and a traditionally high share
of graduates in natural sciences and engineering, which bodes well for innovation in
general but may not necessarily affect the growth of the Sharing Economy. Moreover,
there are increasing concerns about the quality of education and the ability to provide
a workforce with skills that meet the needs of the Swedish economy in the future.
Swedish students rank in the middle of the OECD countries in science education, and
the pay-offs of higher education in Sweden lag behind those of many peer countries.75
Attract foreign skill. Sweden does not rank high in the attraction of foreign skill,
which Christian Ketels76
argues is increasingly necessary in the global economy.
Diversity tends to spur creativity, which in turn leads to a dynamic, innovative climate
characterized by higher productivity. In addition, Sweden’s regulatory scheme and
administrative practices are viewed as bureaucratic, and Sweden has one of the hig-
hest levels of taxation in the world, especially for individuals.
Reassess the tax base. The cost of labor will increase in the future as digitalization
spurs a knowledge-intensive service sector. Thus, increasing taxes on labor might not
be the best approach. Instead, other tax bases must be explored. Some international
discussions on this issue include consideration of both wealth and property taxes.
Housing and the Gains from Dynamic Clusters
Studies show that labor market mobility is closely linked to innovation
(Entrepreneurskapsforum, Dec 2014), and Berkeley Professor Enrico Moretti argues
that the housing market and its dampening effect on labor mobility is constraining
innovation. Professor Moretti has estimated the impact of housing shortages and the
over-regulated building sector on US GDP growth and shows that US economic growth
would have been 10-13 percent higher over a ten-year period if regulations had not
hindered construction and labor mobility in high-productivity, high-innovation cities
such as San Francisco, Boston and New York.
75. Ketels (supra)
76. Ketels (supra)

While Sweden’s largest cities and university areas have emerged as some of Europe’s
most attractive tech centers in recent years, the Swedish housing market is characteri-
zed by high entry barriers and low mobility, which is causing “insider-outsider effects”
and matching problems in labor markets. According to Moretti, highly skilled, innova-
tive labor is the most mobile segment of the labor force because of the substantial
benefits of being in clusters. Tech giants have long operated in business parks located
in the suburbs, but the new generation of startups has elected to establish itself in the
hearts of metropolitan centers that cater to workers who crave easy access to a city’s
fashionable bars, public transportation and quirky apartments in addition to stock
options and six figure salaries.77
Thus, significant attention should be paid to reducing
the bottlenecks in the Swedish housing market in order to enable higher potential
growth.
77. New York Times, December 14, 2014. Stockholm’s Housing Shortage Threatens to Stifle Fast Growing Start-
ups, available online at http://www.nytimes.com/2014/12/15/technology/stockholms-housing-shortage-
threatens-to-stifle-start-ups.html

Chapter 9
CONCLUSION
The reduction of slack in the economy through the use of resources that previously sat
idle creates more and smaller transactions and adds value to the economy. However,
the manner in which such resources are exchanged, e.g., as free digital services or
goods or at falling marginal prices, prevents such transactions from being fully cap-
tured in the official statistics. It is therefore difficult to estimate the extent to which
the Swedish economy has already been affected by the nascent Sharing Economy.
However, this report has discussed where and how the effects of the Sharing Economy
are being felt, in part so that future researchers can endeavor to quantify its effects
and in part to provide certain guidelines for social policies as this phenomenon becomes
more common in the Swedish economy.
As discussed above, it is unlikely that the Sharing Economy will completely replace
the formal economy; however, this discussion demonstrates how economic activity
has started to migrate from traditional intermediaries to digital platforms and thus to
the Sharing Economy.78
78. Rifkin (supra)

CHAPTER 1 APPENDIX
APPENDIX ONE: FURTHER READING
Anderson, C. (2012). Makers: The New Industrial Revolution. Random House.
Baeck, P., & Collins, L. (2013). Working The Crowd: A Short Guide To Crowdfunding
And How It Can Work For You. London: Nesta.
Brynjolfsson, E., & McAfee, A. (2014). The second machine age: Work, progress, and
prosperity in a time of brilliant technologies. WW Norton & Company.
Kelly, M. (2012). Owning Our Future: The Emerging Ownership Revolution. Berrett-
Koehler Publishers.
Orsi, J. (2014). Practicing Law In The Sharing Economy: Helping People Build
Cooperatives, Social Enterprise, And Local Sustainable Economies. American Bar
Association.
Rainie, H., & Wellman, B. (2012). Networked: The New Social Operating System.
Cambridge, Ma: Mit Press.
Rifkin, J. (2014). The Zero Marginal Cost Society: The Internet Of Things, The
Collaborative Commons, and The Eclipse Of Capitalism. Macmillan.
APPENDIX TWO: EFFECTS ON THE FINANCE
INDUSTRY
According to Rifkin, the Sharing Economy and the capital market are finding synergies
with each other as they simultaneously compete and attempt to absorb one another.
Innovation is playing a more crucial role in economic growth and represents an
important channel through which to replace the jobs that are being lost in this tech-
nological paradigm shift. From both a societal and a firm perspective, venture capital
must be channeled to a larger extent to early stage innovation.
Traditional banks are retreating somewhat due to stricter regulations, and it is not
their role to provide venture capital. Nonetheless, there is significant potential from
collaborations involving financial innovations and their infrastructure, such as P2P and
crowdfunding platforms. Also, the Block chain technology has the potential to reduce
risk, costs, and fraud in the financial system.
One potential solution is to use crowdfunding platforms, wherein intangible assets
for new innovations could be assessed by the crowd in real time and the crowd could
thereby set a price on the risk involved in financing a service.
These platforms can help traditional banks to perform risk assessments of digital
assets and social capital in real time. In addition, the cryptocurrency infrastructure
enables fast transactions at decreasing and zero marginal costs.
Crowdfunding and P2P challenge the regulatory framework in the financial industry in
the same way as Uber and Airbnb did in their respective industries. Although demand
and supply are met more efficiently, the risk is shifted from the traditional middleman

to the individual, who thus needs protection from, for example, asymmetric informa-
tion. The financial innovations could have the potential to solve challenges in the
financial sectors such as maturity mis-match and leverage. The regulatory framework
represents both an opportunity and a risk for the Sharing Economy. As the non-banking
sector advances, all financial activities must be regulated in a harmonized manner. The
regulatory framework must focus on the activity, not the technology, to create the
same opportunities for all actors in the non-banking sector.
Policy Implications for Sweden’s Central Bank (Riksbanken)
All current price trends are pushing inflation lower. The crucial question is what kind
of strategy the Sweden’s Central Bank (Riksbanken) can use to fight disinflation in this
environment where both supply and demand factors occur simultaneously. Also, how
harmful is disinflation due to supply side effects? And, if there is an underestimation
of productivity thus pushing inflation downwards, that kind of downward pressure is
not as harmful as demand side effects pushing inflation downwards. The key challenge
is to distinguish between supply and demand factors, which is a very difficult task. We
see three main options.
First, take a “wait and see” approach until the output gap is closed, which occurs
when resource utilization is normalized and growth is close to its potential path. Then,
one can disregard the cyclical factors, making it easier to evaluate the magnitude of
the structural mechanisms. However, we find this strategy to be risky because inflation
expectations have already fallen and further falling expectations are harmful. Inflation
expectations are one of the key channels that can be used to push actual inflation
higher.
Second, adopt an even more expansionary monetary policy to influence the
demand side. A continued, or even lower, negative repo rate, more quantitative easing
or refinancing operations are possible options available to Sweden’s Central Bank if it
aims to pursue a more expansionary monetary policy with interest rates in negative
territory. In our opinion, further expansionary policy will continue to have limited
ability to affect the real economy. In addition, such a strategy risks creating asset infla-
tion, which would cause financial instability in the longer run.
Third, return to a flexible inflation target. This approach would signal that inflation
can deviate from the target for a period of time. Still, that would shift the monetary
policy stance. We think that it is too early to make such a change before we understand
the underlying mechanisms on a comprehensive level.
We recommend an in-depth study to provide a deeper understanding of the
underlying price mechanism of the Sharing Economy. We want to argue that Swedish
inflation has been affected quite a lot compared to other countries by digitalization.
Digital maturity and IT penetration in Sweden is among the highest in the world.
Therefore, Sweden’s Central Bank could be keeping policy too expansionary relative
to its limited ability to influence the supply side effect on inflation following from
digitalization.

The Sharing Economy: Embracing Change with Caution

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